We fancy ourselves forward thinkers here at TrendSource, always looking for the next big trend, the next great disruptor to report to our clients and to report in our food and grocery market research blog. But with all that forward thinking, sometimes we forget to look back, to revisit what we’ve said in the past, how it has panned out (or if it should just be panned), and what is to come.
So, follow us through what we hope will become a semi-regular exercise, Banked it or Tanked it, as we check-in on five topics we blogged about in the past, giving necessary updates and either patting ourselves on the back or kicking ourselves in the pants.
What We Said Then: Papa John’s, as the most recognizable sponsor of the nation’s most recognizable sports league and entertainment product, had insulated itself in a nearly bulletproof marketing strategy, guaranteeing good will and brand recognizability for the foreseeable future.
Banked it or Tanked it? Tanked it. Definitely tanked it.
Celebrating the impenetrability of the NFL shield, and by extension the ensured profitability of any company aligned with the league, seems laughably short-sided and naive only a bit more than a year after publication. Last season saw dramatic viewership declines as the league seemingly courted trouble from every demographic, and as an insane news cycle overtook the league in popular conversation.
At last season’s end, when Papa John had lower-than-expected sales, Papa knew where to look. Explaining their same-store sales decline, COO Steve Ritchie said, “We’ve made a significant investment in the NFL. An 8-percent decline in ratings played a small factor in some of our performance.”
Outlook:
Now only one-quarter of the way into the new season, ratings remain down and a whole new set of panic has set in.
According to the Street, Nomura recently lowered Papa’s rating by 50 basis points, noting that its status “as the official pizza of the NFL” was one of the primary reasons for the lowered outlook. Look for the Papa to broaden his marketing partnerships and the NFL to continue to do nothing meaningful to help itself.
What We Said Then: In an effort to appeal to millennials and urban diners with more unique tastes and options, Dine Equity CEO Julia Stewart led Applebee’s on a $75 million reboot, installing wood burning grills and hand-cutting steaks to connote authenticity and to court a younger demographic. We expressed much polite concern with the initiative, pointing out that critics were already unfavorably responding to the changes, and, more importantly, that it seemed making such a bald-face play for authenticity felt, well, inauthentic. Declining mall traffic and Applebee’s long-standing reputation as quintessential middle-American seemed further cause for concern.
Banked it or Tanked it? Score this one definitively in the banked it column. Within a year of the move, Stewart is out as CEO, and Applebee’s has fully reversed course, admitting “We’ve taken our eye off the ball.” For incoming President John Cywinsky, “In retrospect, we may have tried too hard to attract new guests. That left some of our fans shaking their heads, asking ‘What happened to Applebees?’”
The company will be purging many menu items, doing away with urban- and millennial- pandering dishes such as a turkey sandwich with siracha chile lime sauce, and refocusing on the middle American segment that originally drove its successes.
One further tidbit: the restaurant is now also assessing “whether the brand truly gets credit for hand-cutting steaks in the restaurant and whether we should continue with this approach.”
Sounds like somebody is running some Voice-of-the-Customer Market Research!
Outlook: The company is trying to get back to what it does best, but it remains to be seen if their best is good enough. “Part of what made them great a decade or two ago was their familiarity—you knew what it was and what you were getting. Now, in some cases, that’s what people want to avoid.”
What We Said Then: Get ready, because Click & Collect is coming to a store near you! Ok, we didn’t say it exactly like that, but we clocked this one from a mile away, noting, “the US market is wide open with no real leaders in this space. Many of the larger chains are waiting to see how the European large chains are dealing this new technology when it comes to margins and sustainability.”
Banked it or Tanked it? Banked it, like Tim Duncan going glass.
Since publication, Walmart has rolled out its click and collect operations to over 1,000 of its 4,000+ locations, meaning that nearly a quarter of all Walmarts now offer the option. Similarly, Kroger hopes to be offering click and collect at 50% of its US locations by the end of the year.
Outlook: More and more people are clicking and collecting, and the model’s rise is adding an interesting dimension in the war for grocery dominance being fought between online giants and brick-and-mortar chains.
Only last month, during a panel discussion at Marquette University’s The Last Mile and Urbanization conference, commercial real estate developer Joe Mckeska predicted “a significant portion of grocery sales to move online—from roughly two percent today to upward of twenty percent by 2025.”
Yeah, sounds like good news for Amazon, but McKeska continued, "The ready assumption is that Amazon or other e-commerce players will take the lead, but this assessment may fail to weigh the significant progress U.S. chains have already made in developing their e-commerce capabilities, including bringing click-and-collect to their stores.” Paramount will be identifying which customers are most likely find the service valuable.
Sounds like somebody else is running some panel surveys.
What We Said Then: Grocerants are eating up store space across the United States as grocers recover market share lost to fast casual diners and prepared food shoppers.
Banked it or Tanked it? 50-50 on this one. Yes, grocerants are booming, generating 2.4 billion visits and $10 billion in 2016 sales according to the NPD Group, and visits have increased 30% since 2008. So yeah, we saw this coming, but that’s like taking credit for predicting a Patriots’ fourth-quarter comeback: somethings are just inevitable.
What we didn’t see was just how much this concept could expand, with grocers now integrating full-service restaurants. Consider Kitchen 1883, Kroger’s new in-store pilot restaurant, described as “A fresh new take on American comfort food that will feature a made-from-scratch menu, hand-crafted cocktails, with a family-friendly atmosphere.”
So, while we were thinking about the ways prepared foods and expanded delis were changing grocery stores, grocers themselves were installing full-blown, I-can’t-believe-we’re-in-a-grocery-store restaurants styled after pubs, casual dining, and even fine dining.
Outlook: One other big thing we missed, that may well change the way many Americans shop in-store, and possibly even give them a reason to do so: booze. That’s right, with grocery stores now serving alcohol (not to be confused with wine tasting sections found in natural stores for decades), they hope they can benefit from the “sip and click” phenomenon, or at least encourage a longer average visit.
Indeed, according the smartest guy in Grocery, Phil Lempert, “People like being able to walk around the store more relaxed and have a glass of wine or a beer while they’re shopping. The good news is for the retailer if they do that they’re slowing down and they’re taking more time in the store. They’re seeing more new products that maybe [they’d miss] if they’re just running in and out in 20 minutes.”
What We Said Then: Kellogg—well aware that Americans no longer see cereal as part of a complete, or any, breakfast—established a concept café in New York, where celebrity baker Christina Tosi invented novel dishes with the brand’s most beloved products.
Banked it or Tanked it? Honestly, we didn’t have a clue if or how this was going to work out. But that doesn’t mean that there haven’t been developments. Only recently, Kellogg announced it was shutting down Kellogg Café 1.0, and relocating to a larger, more immersive downtown space. While perhaps initially mocked as desperate, the move has resonated with nostalgia-laden consumers eager to experience an old favorite in a new way.
Outlook: There is no breakfast cereal rebirth coming—American’s nutritional knowledge and dietary preferences have both passed breakfast cereal by. But what was once a staple now has become a novel treat, and this may signal a second life for cereals, no longer loved in the breakfast aisle.
Check out Part 2, where we similarly check-in on some of our past Retail and CPG blogs. And click below to get our 2016 Food Safety Study, so you can see what else we've got wrong and right over the past few years.