At a first glance, the recipe box market is an unlikely target for supermarkets. Representing under 1% of UK grocery spend, it remains small fry. The two major players – Hello Fresh and Gousto – are yet to report a profit. And it remains doubtful whether the concept can ever muster an appeal beyond rich urban foodies. (Incidentally, recipe boxes were named one of the ‘five most pointless tech solutions to non-problems’ by The Guardian this morning.)
Yet recipe boxes seem to have the supermarkets running scared. Waitrose’s own delivered-to-your-door recipe box service, as revealed by The Grocer today, is just the latest in a long line of trials in this area. Just six months before, Waitrose had tested out its own in-store recipe kits (promptly abandoned in favour of meal suggestions at meat and fish counters). Tesco is still keenly pressing ahead with the trial of its in-store kits, which began in November. Last month, Sainsbury’s officially dipped its toe into the market by listing HelloFresh meal kits in its stores. And the Co-op is understood to be mulling a partnership with Gousto, whereby customers can pick up their box for a cheaper price at one of its convenience branches.
It goes to show that, even if the market remains small for now, supermarkets see clear potential for growth. They may well have a point. Many recipe box companies are reporting triple-digit annual sales increases (albeit from a relatively small base) and are gradually working their way towards profit. Add in IGD’s projections for the online grocery market to grow by 68% between 2016 and 2021, and you can see why the big four feel it is a trend that warrants attention.
The question is how supermarkets can tap this independent-led market. By stocking the meal kits in stores, the proposition loses its key appeal of home delivery. The kits typically carry a price premium, and why would customers pay that when you could simply pick the same ingredients in store?
Head to head
Going fully head to head with the likes of Hello Fresh will carry its own set of problems. Waitrose’s Cook Well service is a little late to the party, with market leaders such as Hello Fresh having spent the best part of five years attracting subscribers. Can the Waitrose brand alone successfully attract new customers? Does it have what it takes to poach subscribers from carefully honed propositions? Could the boxes unintentionally reduce store visits among its regulars, and consequently reduce overall spend?
The supermarkets clearly don’t have the answer yet, as evidenced by the fact that most of these propositions are still very much at trial stage. But the amount of thought going into these trials shows they are keen to compete with recipe box startups on some level. And when supermarkets put their mind to something, they tend to succeed.
Whether they decide to tackle the threat simply through merchandising – as Sainsbury’s has done by placing recipe cards and ingredients together on one shelf in some stores – or through their own full-blown recipe box service is anyone’s guess. Either way, HelloFresh and Gousto would do well not to underestimate the power of the supermarkets.
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