Fast food, prepared meals serve up hungry shoppers and incremental sales - Editorial

Discount Store News, Nov 6, 1995 by Don Longo

It seems a day doesn't go by in retailing without news of another chain in trouble. Downsizings, mergers, bankruptcies and liquidations are rampant. What's happening out there?

Well, a lot of the dislocation and unrest in the retail industry has to do with the rate of change in our marketplace. Jack Shewmaker, former Wal-Mart ceo and now one of the top international retail consultants, recently told me that the pace of change has been "phenomenal." He cited the growth in the number of dual-income households, the aging of the consumer, the increasing value of time and the growing understanding of technology as key factors. According to Shewmaker, many people "can't comprehend how fast it's all changing."

Consumers don't, and may never again, spend as much money as they used to when they were chasing the latest fashion trends in apparel. Nevertheless, they are spending unprecedented amounts of money on education, entertainment and convenience.

Retailers that have not grasped these changes are losing. New retailers and mature retailers with new concepts are flourishing today.

In foodservice, we see the growth of fast-food (or quick-service restaurants as they are often called) outlets in nontraditional retail settings. According to the cover story of this issue of FM (see page F7):

* McDonald's operates restaurants in more than 500 Wal-Mart stores, 20 Meijer food courts and 15-The Incredible Universe gigastores.

* Little Caesar's has 600 franchised pizza restaurants in Kmart stores.

* PepsiCo has four of its Taco Bell Express units in Target stores, 29 in Wal-Mart stores, five in BJ's Wholesale Clubs and eight in Bradlees units.

* Pizza Hut, another PepsiCo company, has five Express units in Target discount stores, supercenters and Target's headquarters; 20 in Wal-Mart stores; 15 in Bradlees units; and 17 in BJ's clubs.

* Nathan's Famous has fast-food operations in 53 Caldor stores.

* Sbarro's has about 10 Italian fast-food outlets at Caldor units in the Northeast.

* Subway has one sandwich shop in a Wal-Mart Supercenter in Kansas City, two in Jamesway units and one in a Rose's store.

* Wendy's is available in a few Wal-Mart Supercenters.

Even the new MegaMart appliance and electronics superstore operated by the huge Nebraska Furniture Mart has Burger King and Edy's Grande Soft Ice Cream and Cappuccino Bar outlets to keep customers shopping on its 64-acre retail "campus."

By putting their outlets where people are shopping (more than seven out of 10 Americans shopped a Kmart last year, for instance), these fast-food companies are adapting to changing consumer trends. In most cases, both the general merchandise retailer and the foodservice provider have benefitted.

Another growth avenue that is underdeveloped by retailers today is quality prepared meals. Supermarkets and supercenters have jumped onto this trend, and Wal-Mart is even testing fast-prepared convenient meals to go at one of its discount stores.

As time becomes a more precious commodity, and as the search for healthy meals heats up, supermarkets, convenience stores, supercenters and discount stores will more aggressively seek to satisfy this need.

Fast food and quality prepared meals are two concepts that meet the changing needs of American consumers.