Category: Industry Insights

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Food Industry Insights

How Future of the Food Consumption May Look Like

Use Tomorrowize Tasty Future Index to Track This Theme

Point 1: We All Like to Dine Out, Aren’t We

While cooking at home can be an enjoyable activity, it often proves to be time-consuming and yields inconsistent results. The convenience of having meals prepared and served, bypassing the need for grocery shopping, meal planning, and cooking, is a significant appeal for many. Moreover, busy lifestyles and extended working hours leave limited time for home cooking, prompting many to choose dining out as a quicker, more efficient alternative. It’s notable that the consumption of restaurant food surpassed home cooking back in 2014. While the coronavirus pandemic temporarily boosted home cooking due to lockdowns, restaurants are now experiencing renewed growth, leaving home cooking significantly behind. This shift highlights a clear preference for the convenience and experience that dining out offers.

Point 2: Food Delivery Makes Cooking Even Less Appealing

Delivery apps have significantly bolstered the growth of restaurant food consumption by making it incredibly easy for consumers to order meals with just a few taps on their smartphones. These platforms eliminate the need for customers to visit restaurants physically, thereby saving time and effort. They also provide access to a wide variety of cuisines and dining options, all available for delivery to one’s doorstep. This convenience factor is particularly appealing in today’s fast-paced world, where time is a valuable commodity. Additionally, delivery apps often offer promotional deals and discounts, further incentivizing consumers to order out rather than cook at home. For restaurants, partnering with these apps expands their reach beyond their physical locations, tapping into a broader customer base and increasing their sales volume. This synergy between convenience for consumers and expanded market access for restaurants drives the sustained growth of restaurant food consumption.

Point 3: Online Grocery Growth is Here to Stay

The growth of the grocery market in the US is increasingly shifting online, driven by consumer demand for convenience and efficiency. Online grocery sales are experiencing much faster growth compared to physical stores. Shoppers appreciate the ease of ordering groceries from their devices and having them delivered to their doorsteps, saving time and effort. This trend is further accelerated by advancements in logistics and delivery services, making online grocery shopping more reliable and accessible. Traditional grocery retailers who adapt by enhancing their online presence and delivery capabilities are likely to capture significant market share in this rapidly evolving landscape.

Point 4: Online Grocery Market Attracts New Players

The rapid growth of the online grocery market has attracted significant new players, including giants like Amazon and specialized services like Instacart. These companies recognize the immense potential in meeting consumer demand for convenience and time-saving solutions. Amazon leverages its vast logistics network to offer swift and reliable grocery deliveries through Amazon Fresh and Whole Foods. Meanwhile, Instacart partners with multiple grocery chains to provide a seamless shopping experience. Their entry into the market not only increases competition but also drives innovation and improved service quality, further accelerating the shift from traditional grocery shopping to online platforms.

Winners and Losers

The current trends in food consumption and grocery shopping indicate clear winners and losers. 

Winners

Delivery apps and online grocery services like Amazon Fresh and Instacart are capturing market share by offering unparalleled convenience and efficiency. Restaurants that partner with delivery platforms and adapt to the takeout model are also set to benefit.

Losers

Traditional grocery stores and dine-in-only restaurants that fail to innovate and incorporate digital solutions will likely lose ground. 

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Automotive Industry Insights

Selling New Cars is Getting Exceptionally Tricky

Point 1: EV cars are getting increasingly popular among consumers

Electric cars gained in popularity at the expense of traditional combustion engine cars. While battery electric cars (BEV) are still quite expensive, the affordability gap is closing swiftly. There is still a long way to go for the wide acceptance of electric cars. But it looks increasingly likely that the days of the mass production of combustion engine cars are numbered. Incumbent car manufacturers are late to the game and looking to catch up with electric newcomers. 

Point 2: Online sales at fixed priced disrupts new car sales process 

Recently established electric car companies not only revolutionized the way the cars are made but also the way the cars are sold to consumers. The new selling approach may be called “pre-order online at a fixed price”. While the new pricing strategy might have had purely economic roots, it resonates well with the consumers. Increased transparency and predictability of the car purchase process online is a clear winner over the physical visit to the local car dealership.   

Point 3: Incumbent car producers rely exclusively on dealers

Incumbent car manufacturers took a note on the tectonic shifts in the sales process. Motivated by the better economics of the direct sales channels, many car companies announced plans to move BEV sales online. However, changing the dealership model is proving to be very tricky. Dealers want to stay relevant and want a part of the BEV cake. And recent announcements by the incumbent car manufacturers suggest that dealers’ message is being heard and they are indeed getting an invitation to the BEV party. It seems that incumbents will not be able to cut ties with the dealers in the foreseeable future and will have to share part of the BEV business with them. Pure-play BEV producers are well-positioned to benefit from absence of the middleman in their sales process.

Point 4: Most of the dealers are very exposed to new car sales

The other side of the car producer – dealership marriage is that many dealerships are heavily dependent on the new car sales. Some dealers derive almost a half of sales from the new cars. And new car sales are very important due to cross-sell of high margin ancillary products and services. There has been a slow shift towards the used car market, but the space is crowded and growing business is by no means easy in this space. Again pure-play BEV producers are set to outcompete dealers in the new car sales games due to greater flexibility and vertical integration.

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Food Industry Insights

How Private Labels Eat Brands for Breakfast

Point 1: Hard discounters have championed the private label strategy

The largest discounter globally, German Aldi, has been the fastest-growing grocery chain in the U.S. The private label strategy was at the epicenter of its success. As the number of consumers looking to save money while shopping close to home continues to rise, the future looks bright for Aldi and other discounters.

Point 2: Traditional chains have a lot of catching-up work to do

Discounter chains like Aldi and Trader Joe’s have relied on the private label strategy to attract consumers to their stores. Traditional grocery chains fall far behind discounters in terms of private label penetration. As conventional grocery stores look to catch up with discounters, growth prospects of the private label continue to look promising. At the same time, national brands (especially the weaker ones) are set for a rough ride as customers and stores opt-in for private labels.

Point 3: The unstoppable rise of the private label

Historically the role of retailers was mainly limited to the distribution of nationally branded products. But with the rise of retail giants (i.e. Walmart, Amazon, Costco), national brands got a new competitor, retailers themselves. Retailers’ own labels, once used to focus on low-value goods, have been groomed into an affordable quality category. And that resonated well with the consumer. The relentless growth of Costco’s Kirkland Signature brand is the most prominent example.

Point 4: Private label is taking shelf space from national brands

With growing acceptance among consumers, retailers allocate more shelf space toward private labels. Costco proves the point again. Share of Kirkland Signature brand sales have been climbing steadily over the past decade. In fact, Costco’s growth story has become increasingly reliant on the success of the Kirkland Signature brand.

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Beverages Industry Insights

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Fintech Industry Insights

Digital Wallets Cause Remarkable Shifts in the Payment Industry

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