Magazine article Marketing

Helen Dickinson on Retail: Stores Get Taste for Premium Food

Magazine article Marketing

Helen Dickinson on Retail: Stores Get Taste for Premium Food

Article excerpt

Something interesting is happening in Dallas, Texas, with US supermarket Wal-Mart. To UK shoppers it probably represents the champion of pile-it-high, price-driven retailing, but in the oil state, it has created a 'laboratory' store with an unprecedented focus on premium food products.

The company has recognised that premium products are a serious growth area and with natural and organic retailers such as Whole Foods Market highlighting the importance of food provenance, it simply cannot ignore this increasingly lucrative area of the grocery market.

To this end, Wal-Mart's trial store includes 2000 premium items, a gourmet cheese section, made-to-order sandwiches, an expanded organic and natural foods range, a Wi-Fi-enabled coffee shop and a sushi bar.

The same is happening in the UK, where all the supermarkets - even the hard-discounters - have expanded their own-label premium food ranges.

Such has been the demand, that the premium sector in the UK is now worth pounds 11.9bn a year, which represents 9.5% of the total grocery market, according to the Institute of Grocery Distribution (IGD).

Although premium food was once the preserve of the affluent shopper, demand has become much more widespread across most customer demographics, and in all parts of the country.

This has enabled Waitrose to expand into regions well beyond its heartland of the south-east England. IGD calculates that this has contributed to an impressive growth rate of 69% for the company over the past five years.

Marks & Spencer is also experiencing a period of rapid expansion for its Simply Food store format, through a combination of company-owned outlets and franchises at train stations and motorway sites. The company has opened nearly 150 stores in the UK and the Republic of Ireland over the past five years.

Specialist food retailer Julian Graves has an aggressive store-opening programme that it hopes will increase consumer appetite for its ingredients and luxury snacks. As well as freestanding units, it is also considering placing kiosks and concessions in shopping and garden centres and department stores.

At the upper end of the food market, Harrods recently opened its Harrods 102 convenience store opposite its flagship outlet in London's Knightsbridge.

This prompted Harvey Nichols to extend the opening hours of its renowned food hall to compete with those of its neighbour in SW3. …

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