The Official blog of Dark Matter, Inc.

SUMMARY: As the economic downturn forced consumers to make trade-offs and buy less, consumers focused greater attention to at-home meals and in-home entertainment. Smart manufacturers and retailers are taking advantage of this trend by offering creative meal solutions, collaborating with partners to co-promote, creating engaging online sites and making it easier for consumers to relish the joy of cooking.

When you think about it, isn’t food the real social network of the ages? Food is, and always has been, that special bonding agent that connects family and friends—with no electronic device necessary! Whether we gather for holiday celebrations, special occasions or the traditional family dinner, food, plain and simple, brings people together. And, as the U.S. economy experienced one of the worst downturns in recent history, consumers showed a renewed focus on back-to-basics in-home cooking.

Food Matters Most
When money is tight, food matters most. Edible departments are growing and non-edible departments are off as consumers are making trade-offs or buying less. Consumers are placing more attention on at-home meals and in-home entertainment options as evidenced by more time spent surfing cooking-related websites, watching food-related TV programming and reading cookbooks. Nielsen reports that each month, food and cooking websites are visited by an average of 70 million unique online visitors, taking into account home and work online activity from year ending September 2010. The number of households tuned to the Food Network during prime time reached over 1.1 million viewers in the first quarter of 2010 — an increase of 9 percent versus year ago. And as total book sales saw a year-to-date decline of 4 percent, cookbook sales rose 5 percent.

Savvy manufacturers are capitalizing on opportunities that demonstrate how brands not only deliver a consumer solution, but also help drive a retailer’s sales efforts. For example, unit sales of womens’ cosmetics have been showing low or flat growth over the past couple of years, but the category is faring better than the entire health and beauty department. Evidently, looking and feeling good is something most women are not willing to sacrifice. Food and non-food retailers need to look for opportunities to win consumer hearts, minds, and dollars with the right assortment, right price, right promotion and right message.

Seize the Opportunity
An all-out food fight is taking place in the industry as grocers are seizing the moment to grab a share of declining restaurant sales through innovations relating to ready-to-eat foods for consumption in and out of their stores. With retailers offering improved quality of prepared foods and in-store food-service programs, this is the initial phase of lifestyle retail formats emerging as retailers look to enhance the entertainment value of a traditional mundane shopping trip and entice shoppers to spend more per shopping trip.

And if you don’t think food matters, stop into a mass merchandiser retailer where you will notice how some have modified and expanded food sections in their stores by selling fresh perishables (meat and produce). And, take a look at how drug and dollar store retailers are expanding the selling space in their stores devoted to food.

Restaurant brands may have appeared in grocery stores well before the U.S. economy turned south, but more and more of them are finding a spot on grocers’ shelves. And the latest is celebrity chef-inspired brands. Dollar sales for a broad set of selected restaurant and celebrity chef brands are up 12.6% and unit volume is up 10.6% versus two years ago, with annual sales just shy of $4.75 billion. Regardless of the economic situation, this is a great way for food manufacturers and restaurants to collaborate and extend the reach of known brands and drive sales at retail.

Creative Collaborations
Meal-deal programs that help families save can be described as the next generation of recipe marketing. And most grocers are playing “follow the leader” by making recipes ideas and easy meal solutions—featuring manufacturer and store brands offerings—a prominent part of their websites.

Many retailers and some food manufacturers are also doing a great job of merchandising or co-promoting with complementary food categories during key selling periods. Using these categories in continuity-based loyalty programs by rewarding shoppers with discounts based on spending levels to get consumers to spend even more!

Want to Sell More Groceries – Try Cooking Classes
Another way for grocers to drive more sales of groceries and cookware is to teach shoppers how to cook. Since cooking schools won’t work in all banners or locations, retailers should explore options for online cooking lessons. And don’t forget about the kids…or dads. With more men out of work than women and with some families opting to have the husband stay at home with the kids, online cooking tips and online cooking videos gets the whole family involved in the process.

Smart manufacturers are also providing consumers with cooking solutions that include items that go well beyond the products they sell by enabling consumes to purchase kitchen and cooking solutions online. And providing cooking solutions via online established cookbooks using recommended ingredients is a great idea too.

Food for Thought
While our economy has many consumers thinking about the prices they pay for just about everything, it seems that too much emphasis is being placed on low prices and not on the benefits and solutions (real and emotional) consumers can receive from manufacturers and retailers. Here are some thoughts for how retailers and manufacturers can capitalize on these trends:

1. Consider meal solutions for breakfast, lunch and dinner that leverage both center store and perimeter categories.
2. Collaborate on meal solution formats and arrange the store aisles so shoppers don’t have to walk the entire store to find one-stop items.
3. Leverage cooking classes and recipes both in-store and through multi-media (print, online, smart phone apps) outlets.
4. Try in-store and mobile demo and sampling stations so your shoppers and consumers can smell and taste what you have to offer to drive a sale.
5. Cross promote against complementary food and non-food categories to provide value along with solutions.
6. Look to social media sites to attract recipe ideas and feedback from shoppers or consumers and use banner or brand advocates to speak for you.
7. Explore celebrity chef or restaurant alliances to build equity with people who enjoy cooking.
8. Use advertising copy that embraces the joy of cooking and celebrations with family and friends. Be sure to make the brand or banner clearly visible and learn from the growing trend around reality video and leverage banner and brand advocates in your ads.

November 22, 2010
Todd Hale, SVP Consumer & Shopper Insights