Walmart's Meal Kits Are Not The Solution To Fight Amazon
The nation’s largest food retailer announced this week that it would roll out its own version of meal-kits to 2,000 of its stores this year.
The nation’s largest food retailer announced this week that it would roll out its own version of meal-kits to 2,000 of its stores this year. Currently Walmart offers the kits, which retails from $8 to $15 and serves two people, in more than 250 stores. Speculation in early February by Gabelli & Co. analyst Matthew Trusz was that Walmart was looking to acquire Blue Apron actually raised the troubled company’s stock price by almost 7 percent on February 2nd; but it appears that Walmart has decided to enter the meal kit business on its own (at least for now).
According to Nielsen’s latest report just released today, The Meal Kit Opportunity, while the majority of meal kits are purchased from online subscription services, in-store meal kit sales grew rapidly in the past year, up 26.5% to $154.6 million in sales, posting growth of more than 26% year-over-year. Overall, the report states, 9% of Americans say they’ve purchased a meal kit in the last six months and 25% of consumers say they would consider trying a meal kit in the next six months. In December of 2017, USDA published a report on Millenials eating and food purchasing habits and found that this generation, which now makes up roughly 26 percent of the total US population, eat out more frequently than other generations, spend more on prepared foods that require minimal preparation, spend less time preparing food at home and spend less money on foods to consume at home. The report also found that nearly two-thirds of Millenials purchased prepared foods from limited service restaurants every week.
Tyler Lehr Walmart’s senior vice president of Deli Services said in the statement announcing the roll out of the program that “more than 80 percent of Americans don’t know what they will have for dinner tonight. Scrambling to find a meal puts pressure on a family.”
Walmart’s roll out also includes fresh One Step Meals that only require heating – which may have even a larger potential than their Meal Kits. While Blue Apron, Hello Fresh, Martha & Marley Spoon and dozens of other DYI food kits tout that consumers enjoy the assembly process and how their kits make it so easy for the home cook to excel; many people say they have already become bored with having to unpack all the ingredients and do all the preparation; many also complain about the wasteful packaging that is required both in shipping and individually packaging each ingredient. Supermarkets across the nation have rushed to offer meal kits in their sotes that eliminate the extra packaging required for shipping and the need to pre-order multiple meals which in some cases are delivered in three days.
In 2005 “meal assembly stores” were all the rage and according to the now defunct Easy Meal Preparation Association there were over 1,400 of these stores throughout the US. Today Dream Dinners is one of the few chains to survive with 75 locations in 22 states. Which makes one wonder if the Meal Kit trend might find itself in the same position.
Walmart’s strategy comes on the heels of Amazon announcement that it will be delivering its own prepared foods and meal kits from its Whole Foods stores. While both companies have publicly said they are fierce competitors, this move by Walmart brings meal kits and prepared foods to a less affluent (and larger base) shopper than those who shop at Whole Foods. It would not be surprising to also see these type of offerings start appearing in hipper packaging as they are a perfect fit for Walmart’s Jet.com business, which already sells a wide variety of Omaha Steak meat, seafood and side dish products.