Food gifts can give, over and over again

August 25, 2010

Supermarkets may be overlooking a high-margin opportunity in food gifts and baskets

Supermarkets may be overlooking a high-margin opportunity in food gifts and baskets – a business populated by catalogers, online retailers and specialty stores – which shoppers might perceive as a natural extension of supermarkets’ everyday food authority.

Granted, supermarkets deal largely in staples rather than the stuff of impressive baskets. Yet stores like Fairway, Wegmans and Whole Foods carry basket-caliber brands day in and day out. And The Lempert Report believes other operators could pursue this business in low-risk ways that won’t complicate store operations:

Supermarkets could train seasonal staff as specialists, and dress up a special showcase either by the walk-in or the service deli/gourmet cheese area as the department’s home. Chain buyers could still plan what to carry now for the upcoming Christmas season (think personal and corporate gift-giving). Part of the mix could be regional favorites, such as steak sauce from Austin, Texas, or smoked salmon from New York City.  Also, stores could use these showcases to raise the profile of ‘gift-caliber’ foods routinely stocked in many categories – to drive incremental traffic beyond the holiday periods. Shoppers made more aware of the foods’ presence might just treat themselves at different times.

Or supermarkets could partner with local independent providers – chocolatiers and gourmet food entrepreneurs dot many metropolitan areas. They might love to co-brand with a supermarket, benefit from the high traffic exposure, do all the work, and pay the store a fee for being highlighted on the selling floor and in circulars.

This idea isn’t for every food store or even every market. Operators need to assess the appropriateness of this concept based on demographics, corporate presence nearby, and other factors.  What jogged this idea was a MediaPost News account of a Packaged Facts study.

According to the report, consumer food gifts grew by 9.6% to $14.9 billion between 2007 and 2009, and are expected to exceed $21 billion by 2014. The growth of specialty foods as gifts outpaced the growth of chocolate and candy sales. “Specialty foods are the main component of food gifts and baskets because people want to give gifts that are unique, personal, indulgent, convenient and fun. For many consumers, buying specialty foods during a recession is an affordable luxury that meets their criteria for an ‘ideal’ gift for others,” Don Montuori, Packaged Facts publisher, was quoted by MPN.

People won’t forsake the holidays, no matter how deep the recession. Food gifts are an idea for this time, and supermarkets could capitalize.