Spending to save: Warehouse clubs fuel bulk buying
It may not be the glamorous end of retailing, but cash & carry is alive and well. Meanwhile consumers who want to buy in bulk without resorting to processed food can visit meal assembly outlets such as Dream Dinner to assemble recipe ingredients to cook later. Devoting a little time and money at the outset can facilitate significant savings down the road, as Bernice Hurst reports.
The very nature of value in food manufacturing and retailing depends on shelf life and bulk buying. For the consumer, this means an ability to afford to save and a facility to store. Not to mention a willingness to eat the same thing on many occasions.
Home delivery companies such as Eismann, with providers in nine countries across Europe, and UK-based Wiltshire Farm Foods, rely on this. The new American fad for preparing a month's meals at a time in a purpose built kitchen follows the same principle.
The growth strategy of warehouse clubs such as Costco and Makro is designed to introduce their style of shopping globally. Countries where people have traditionally shopped daily are suddenly seeing vast warehouses and bright new stores with shelves filled to overflowing with shiny new packages. They are being tempted into changing their way of life and buying food to stock their own shelves.
Warehouse clubs may have started in the US when Costco first opened its doors to the public in Seattle in 1983, but today the company has nearly 500 warehouses and operates in Canada, Mexico, the UK, Korea, Taiwan and Japan. Originally serving only small businesses, a desire to increase its buying power led to a relaxation of its membership requirements.
Membership subsidies overheads
Metro, too, is expanding worldwide with outlets in 24 countries; the cash and carry division is its largest, trading as both Metro and Makro. Like clubs, cash and carries were initially devised for small business customers, especially independent retailers who would re-sell what they had purchased. Now, however, there are many categories through which individual consumers can obtain membership. The common key is that paid membership subsidises overheads, which are also kept to a minimum in terms of merchandising, enabling deep discounts. Because of the target market, bulk buying is de rigueur.
A survey of ACNielsen's Homescan consumer panel in July 2005 about the effect of gas prices on shopping patterns revealed, perhaps unsurprisingly, that a higher proportion of affluent than poor households shopped in warehouse stores. This group is better able to afford bulk purchasing, and the petrol needed to get to the warehouse, endorsing the adage about spending in order to save.
Dream dinners, super suppers
For those willing to buy in bulk but preferring their food unprocessed and ready to cook, one of the hot trends in the US is meal assembly outlets. Companies like Dream Dinners and Super Suppers attract customers who move from one 'station' to another, scooping up pre-cut, pre-measured ingredients according to the recipe selected. Meals are then taken home to freeze, with one ready for defrosting and cooking every night of the week. It may not be possible to offer a different meal each night but there is enough flexibility in each month's menu to avoid too much repetition. Since starting in 2002, Dream Dinners has expanded through franchising to have over 100 stores spread across nineteen states.
Unlike their British predecessors who sold individual packs, Dream Dinners and those who have cottoned on to its success have minimum quantity restrictions. Leaping Salmon, the pioneer of meal kits, leapt to an enthusiastic audience in 1999 but was unable to make ends meet and sold itself to Threshers, the high street wine merchant, which planned to make the take-home system more widely available. Following the takeover in 2003, the brand swiftly sank without trace.
Critical mass essential
Similarly Rocket, started by Unilever to jump onto what it perceived as a bandwagon, bought out Leaping Salmon's train station retail outlets, re-branded them and then closed completely within a matter of months. Both thought the idea of pre-cut and measured fresh, healthy ingredients that customers took home to assemble and cook in a matter of minutes with foolproof and delicious results would be irresistible. The lack of scale, or bulk buying option, could account for the lack of profits.
The Hartman Group's 2006 trends prediction lists "up-scale specialty meal solutions" as one that could go either way, however. Although they recognise the current popularity of prepared foods offering "exceptional quality and taste", they question whether it is enough to sustain the premium prices charged.
Many believe it to be a truth self-evident that you have to spend money to save money. Dream Dinners, Super Suppers and their ilk make the most of that mantra, pointing out that preparing and buying a month's meals in the space of one two hour session is more economical than trying to work one day at a time.
In these days of BOGOFs (Buy One, Get One Free promotions) and bulk-buy promotions, how do details such as wastage and freshness get factored into the equation? Not a problem at Dream Dinners et al. Customers use only what they need and have no started jars or packs sitting around to worry about. Ingredients come loose so that the only packaging used is that needed to take home the assembled meal. And as recipes are designed to be frozen, everything customers start with is fresh.
The other choice, bulk buying meals already prepared and frozen, ready to be heated and eaten, pre-supposes considerable available storage capacity. Both Eismann and Wiltshire Farm Foods, for example, expect customers to buy multiple portions of each meal. They may offer a choice of several hundred different dishes, but imagine the space that is needed for a dozen each of enough meals to avoid eating the same thing every night of the week. Individually selected frozen meals have been losing market share, as Unilever has learned the hard way. Following hefty investment and disappointing results in re-launches of Birds Eye in Britain, Iglo in Germany and Findus in Italy, the company is now reportedly considering sale or closure of plants across the Continent.
Space is the biggest potential obstacle to bulk buying, though. In an industry essential to us all but chock full of contradictions and complications, the conflict between saving money and storing purchases is becoming increasingly pronounced. Starter homes are coming with smaller kitchens; larders are a thing of the past, a word barely recognised by anyone under the age of 50. Loft and studio apartments touted for city living may include a shelf for a microwave and a small sink but little or no food storage or preparation area. More people may find themselves going back to frequent shopping for fresh food after all.
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