By Moritz Kolb
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This article comes from Moritz Kolb, a former YES Student of ESOMAR Global Qualitative 2015 and ESOMAR Congress 2016. Moritz has since started his career in the market research industry as a Project Manager for the EHI Retail Institute. Moritz provides us with insight into the €9bn food and beverage trade. This is based on recent research conducted with 29 leading decision makers from companies whose size totals 750,000 employees and have a NET sales volume of approx. €132bn
According to the latest market survey by the German EHI Retail Institute in Germany, more than €9bn euros are generated annually in the food and beverage trade. Commercial food service takes place across multiple sectors and areas, and in almost all sectors retail-gastronomy hybrids can be discovered. These hybrids combine provide gastronomic experiences within a retail environment.
Retail and gastronomy were once clearly separated. On the one hand there were product offers from grocery retailers for home cooking. On the other, there were restaurants providing a stand-alone gastronomic offering. This clear separation no longer exists, and the merging of the formats is increasing with retail gastro-hybrids often conceptually relating to trading activities.
In Germany many food retail businesses are currently developing a more gastronomy-style offering. Commercial gastronomy includes the full range of gastronomic services, as well as drinks and ready-to-eat meals. They range from coffee concepts as a feel-good and welcome service to lunch offers but also gourmet evening events.
In shopping centres, retail-gastronomic offerings are used by retailers competing for consumers time, attention and memorability. Retailers often show their food competence to be on par with businesses in the “traditional” out-of-home gastronomy market. Gas stations generate additional sales with convenience and gastronomy offerings, fashion retailers develop coffee concepts for feel-good and welcome services for customers. In shopping centres, food offers assist traders in competition for frequency, length of stay and customer experience.
Out-of-home food consumption in Germany has risen steadily in recent years. According to npdgroup Germany, gross sales of more than €80bn euros are expected for 2018 in this area. This trend is mainly based on social factors. Shopping often is a pastime, so shops become places of human contact. Cafes, bars and restaurants add to this experience by being meeting places for people.
Therefore, many new gastronomic concepts are trying to establish a social meeting place where guests are welcome. It is increasingly about the creation of hybrid places through a fusion of classic retail, gastronomy, art and entertainment. This is therefore one of the key growth drivers of the retail-gastro hybrid trend.
The popularity of this hybrid offering is clear: more than half of total food and beverage trade (56%) is generated in food retailing. These total €5.2bn are divided into the three areas: foyer €3bn, on-the-go convenience €2bn and catering in the commercial space €0.2bn
The Furniture Industry: A Retail-Gastronomy Pioneer
Of all retail spaces with a gastronomy offering, it is the furniture industry that has been at the forefront of customer gastronomy. The concept of retail catering in peripheral locations is a successful component of large furniture stores. Approximately €400mn are being transacted in around 500 furniture stores throughout Germany.
Department stores have also been a staple of the traditional catering trade with their self-service restaurants. At present, optimization and new (pilot) concepts are taking place in the direction of themed gastronomy and target group-specific offers. In 150 relevant locations in Germany, gross sales are around €240mn. These established trade restaurants thus together account for approx. 7% of total gastronomy sales.
The Future of Retail-Gastronomy Hybrids
Several trends suggest that retail-gastronomy will continue to grow:
- Greater disposable income to continue the rising volume of people eating out-of-home
- The disappearance of rigid meal structures
- Retailers placing greater importance on customer experience
- Time poor customers wanting to minimize time travelling between places of interest
Moreover, significant growth can be expected with developing offers at petrol stations (shop sales such as coffee and snacks) and fashion shops but also in revitalized shopping centres. In these growth markets, increasing quality regarding the food and drinks offered, as well as the equipment and the ambience is a growing trend. In the furniture trade and department stores, the gastronomic offer has been established for decades, which is why stable sales or a slight growth can be expected here.
Moritz Kolb & Olaf Hohmann, EHI Retail Institute GmbH
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