Meal-Kit Meltdown: DIY Meals Are Cooked

The Wall Street Journal: “The promise of meal kits was to finally make cooking easy enough that Americans would actually do it. Proponents hoped that a cooking revival also could ease the nation’s obesity crisis—a way to reclaim control of what we eat from the big food manufacturers and restaurant chains … the amount of cooking required has apparently been too much, even for the farm-to-table crowd. (So much chopping!) Industry analysts believe that meal-kit purveyors are having trouble retaining customers.”

“The companies are only now starting to acknowledge the truth about the American home cook. Blue Apron recently introduced recipes that are faster to prepare. Amazon and other more recent entrants such as FreshRealm, Gobble and Terra’s Kitchen are going further, dialing back the prep work to almost zero.”

“Americans talk a good game about the importance of home cooking and family meals, but we still want convenience above all. To succeed, meal kits won’t just have to be easier than starting from scratch; they will have to be as easy as takeout.”

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Cut-Throat: Lidl vs. Walmart, Kroger & Aldi

Axios: The German discount grocer Lidl made its United States debut this June, opening 20 stores in the Carolinas and Virginia just weeks after its compatriot Aldi announced its own expansion plans in the U.S. earlier this year … Lidl entered the market aggressively, with prices in its Winston Salem, NC, store that were 9.1% lower than the local Walmart, according to a study conducted in June by Jefferies analyst Christopher Mandeville. Given those results and Lidl’s ‘enjoyable’ shopping experience, he says Lidl could be ‘highly disruptive’ to incumbents like Walmart.”

“But the tide may be shifting, as it appears Walmart has cut the price differential to just 2%, according to a survey by Oppenheimer that looked at prices roughly a month after Jefferies visited the same locations … Oppenheimer analysts Rupesh Parikh and Erica Eiler write, ‘pricing appears dynamic and cut-throat’ at the Walmart and Lidl locations they visited in Winston Salem. ‘During our visit in the afternoon at Walmart, [a gallon of] milk was priced at $2.08. When we went back in the evening, milk dropped to $1.95. Lidl had its own deals, with a carton of eggs on offer for just 52 cents’.”

“Parikh and Eiler think that Kroger (rather than Walmart) is more threatened by German upstarts. Aldi has been in the U.S. longer than Lidl, and has big plans to become the third-largest grocer in America. But Parikh and Eiler were unimpressed, calling Lidl ‘a bigger and nicer Aldi,’ which had ‘wider aisles, enhanced lighting, and a bit more upscale feel,’ they write … No doubt the grocery shoppers of Winston Salem and other markets are enjoying the ongoing price war.”

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Small Grocers Boost DC Neighborhoods

The Washington Post: “Good Food Markets is just one of a handful of neighborhood grocery stores that have opened across Washington DC recently, part of what appears to be a resurgence of small-scale groceries catering to neighborhood residents — in stark contrast to the trend of disappearing mom-and-pop stores in small towns across the country. Even as more openings are in the pipeline for large retail chains such as Whole Foods and Wegmans, the smaller neighborhood stores are making their mark. By one count, at least six have opened since 2015, and more are in the works.”

“There is a ‘renaissance of the neighborhood,’ said Keith Sellars, president and chief executive of the Washington D.C. Economic Partnership, a nonprofit, ‘and people want services that they can walk to’ as well as ‘convenience on all levels.’ The new corner groceries are part of a broader back-to-the-city movement in parts of the country, said Brett Theodos, a senior research associate in the Metropolitan Housing and Communities Policy Center at the Urban Institute. That trend, Theodos said, is driving demand for a ‘job-rich, transit-rich environment’ and ‘the meeting together of commercial and residential sectors in a way that feels very authentic and vibrant’.”

“Owners of these newer neighborhood grocery markets push back against the idea that their stores, which often stock more expensive, specialty items, price out lower-income consumers and are yet another instance of gentrification. For one thing, many of the new stores have opened in spaces that had stood vacant for some time … at Good Food Markets, the driving mission of the entire business is ‘bringing the overall progress of prosperity and development across the District,’ co-founder Kris Garin said. Good Food Markets intentionally chose to open on Rhode Island Avenue … where close to a quarter of the population are food stamp recipients, said Philip Sambol, the vice president for operations. The goal is to make healthy food accessible to everyone.”

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Supermarket Squeeze: Too Many Stores

The Wall Street Journal: Commercial square footage of retail food space per capita last year set a record, with 4.15 square feet of food retail per person, according to CoStar Group, a commercial real-estate firm, nearly 30 times the amount of space allocated to groceries at major chains in 1950 … Part of the expansion comes from grocers, who accelerated their store openings as a way to drive sales growth after the 2008 recession. At the same time, club chains, dollar stores, pharmacies—and even gas stations—increased their fresh food offerings to drive traffic and boost profits.”

“The food-retail sector has become even more saturated at a time when competition is only getting fiercer, particularly at the two ends of the shopping spectrum. Growing European deep-discounters Aldi and Lidl are vying for U.S. market share, hoping their prices will win over the budget-conscious shopper while internet companies like Amazon.com Inc. are trying to lure higher-income grocery shoppers online. Regional supermarkets and conventional ones such as Kroger Co. and Albertsons Cos. are the most likely to get squeezed in the process, according to analysts.”

“While about 37% of sales of consumable items such as food and beverages still take place at traditional supermarkets, with the sector posting more than $440 billion in sales last year, it was a 6% drop from 2015, according to Inmar Willard Bishop Analytics. Meanwhile, convenience stores sold $73 billion worth of prepared foods, beverages and other food service last year, up 72% from 2010, according to the National Association of Convenience Stores. Two-thirds of sales at dollar stores come from food, beverages and other consumables, while they account for about a third of transactions at pharmacies.”

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The Killer Instinct: How Men Shop

The Washington Post: A new survey by Men’s Health magazine “found that 84 percent of men are now the primary grocery shoppers in their households, marking a 19 percent increase from a decade ago … It is worth noting that Men’s Health surveyed only men. Other surveys of both men and women have concluded that women continue to do slightly more of the country’s food-buying: NPD Group, for example, estimates that men are the primary grocery shoppers in 41 percent of U.S. households, while market research firm VideoMining puts that figure at about 49 percent of shoppers.”

“In any case, there is mounting evidence that more men are shopping for groceries than in previous generations. The reasons for those shifts are twofold, experts say. Gender roles are shifting, which means men are taking on more household responsibilities. And Americans are increasingly putting off marriage … And it doesn’t hurt that ‘there’s a younger generation of man who’s actively interested in food,’ said Paco Underhill, chief executive of Envirosell.”

“But there are still pronounced differences in how men and women approach grocery shopping … Case in point: Women are most likely to buy 12-packs of beer, while men typically buy six-packs, according to Underhill.” He comments: “Men tend to be hunters: They want to kill something quickly, drag it out and feel successful. Women, though, they’re thinking ahead and planning accordingly.”

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Aldi Conquers With Cromwell Gin

Business Insider: “The £9.97 Oliver Cromwell London Dry Gin from Aldi won a gold medal at the International Wine and Spirits Competition (IWSC) this week. In doing so, the budget retailer’s gin beat bottles costing up to four times the price in the blind taste test.”

“A spokesperson at the International Spirits Challenge said: “The display of awards achieved by Aldi this year at the International Spirits Challenge was fantastic. They consistently showcased high quality products in the blind tastings, which demonstrates that you don’t have to compromise on price to enjoy great tasting drinks.”

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Mom & Pop Groceries: A Crisis in Rural America

The New York Times: “R&R Market — the oldest business in Colorado, built by descendants of Spanish conquistadors … is in danger, at the edge of closing just as rural groceries from Maine to California face similar threats to their existence … Across the country, mom-and-pop markets are among the most endangered of small-town businesses … The phenomenon is a ‘crisis’ that is turning America’s breadbaskets into food deserts … erasing a bedrock of local economies just as rural communities face a host of other problems.”

“The market was built in 1857 by José Dario Gallegos … who turned his store into a hub. His descendants have operated it since, filling the shelves with vegetables, locally grown bolita beans and hand-packed chiles.” His great-great-grandson, Felix Romero, and his wife, Claudia “offer food on credit, supply baptisms and funerals, cash checks, issue hunting licenses, pay local taxes. But they are exhausted. And yearning to retire.” However: “Those who want to take on these stores can find it impossible to buy. If you’re poor — and many people in these towns are — and interested in a risky deal, few banks will give you a loan.”

“In recent years, some communities have united to save their grocery. In Walsh, Colo.; Iola, Kan.; and Anita, Iowa, residents rescued their markets by forming cooperatives or public-private partnerships … Here in San Luis, the Romeros are trying to sell their market and six upstairs apartments for $600,000, half of what an appraiser gave as its value … Now, Mr. Romero is making peace with the fact that the shop could pass out of the family under his watch. If it stays open at all.”

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Will Mom & Pops Rise Again?

New York Magazine: “What becomes of the ground-floor city when retail mutates into new forms? Some luxury brands might keep their boutiques as indulgences and loss leaders. But as national chains’ contracts give up on physical locations, commercial rents could fall, clearing the way for a resurgence of small stores: designer cookies and pet spas, but also used-book stores and shoe-repair shops. Or maybe only bars and restaurants will survive, and we will repurpose vacant storefronts into living spaces for a housing-strapped city.”

“Amid all these conflicting trends, the architecture of retail is feeling its way, with sometimes-happy results. The new Nike palace by BKSK, on Broadway at Spring Street, is a paradox, a small structure that contains an immense store and looks at first glance like it was always there. The façade, which fades from masonry to glass as it approaches Broadway, turns it into one of the finest commercial buildings in recent years. Inside is a jangling theme park of high-tech comfort and moisture-wicking synthetics. But the sepia exterior looks as though it has just leapt from an old photograph.”

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New England Scrambles to Save Country Stores

The Wall Street Journal: “For 203 years, the Francestown Village Store served its tiny New Hampshire town, selling everything from fresh-baked bread and live fishing bait to winter hats and groceries while offering a place where residents could gather and gossip. But the institution, formerly known as the Long Store, closed earlier this month … hit by changing consumer habits such as online shopping and residents who increasingly commute out of the town of 1,600 for work and shop at large grocery stores on their way home.”

Designed to provide everything rural residents might need, general stores often are packed to the gills with things ranging from tools and electrical supplies to fly swatters, newspapers, meat and other food, long underwear and maybe even a bottle of champagne. Many offer postal services and function as a town center, where locals debate political issues or find out who in the community needs help.”

“Vermont is losing three or four general stores a year, and is down to about 80 from more than 100 a decade ago … In Putney, Vt., the local historical society raised money to buy the embattled Putney General Store and in May took over the day-to-day operation there. In Bath, N.H., Scott and Becky Mitchell jumped into an auction last year and bought the historic Brick Store, which is so old that the sides of its counter are angled to allow women in hoop skirts to get closer to the merchandise.” Says Becky: “Customers come and say, ‘thank you for saving it.’ The town really needed it.”

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How Big is the ‘Store Brand’ Threat?

The Wall Street Journal: “Supermarkets’ ‘private label’ goods have historically been less important in the U.S. than in other mature markets … But now the big European discounters are expanding in the U.S.Lidl launched on June 15 with six stores in North Carolina, just a few days after its key rival, Aldi, unveiled a five-year, $5 billion U.S. expansion plan. These expansion efforts themselves don’t need to succeed. The threat alone will hasten the shift of U.S. grocery toward private label.”

“The more upscale team of Amazon and Whole Foods will speed the push into private label. The tech giant has been plowing resources into its AmazonBasics range; the Whole Foods equivalent, 365 Everyday Value, anchors the grocer’s new, compact store format, 365. Ever attuned to millennial trends, Silicon Valley has even thrown up an online retailer called Brandless that sells $3 health-conscious, private-label goods.”

“Some companies look less exposed than others. Those with big overseas operations, such as Nestlé, Unilever UL or Mondelez, or must-have brands, like Kraft Heinz, stand a better chance of seeing off the new competition than those with U.S.-centric portfolios or lots of third or fourth-placed brands. Bernstein thinks Campbell’s, Conagra, General Mills, Kellogg and Smucker’s are all at risk.”

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