Albertsons has announced a new direction for Plated. (File Photo)
Plated, the meal kit subscription business Albertsons bought for $300 million in 2017, will soon cease deliveries and become a more widely used store brand for the retailer.
The subscription service will be phased out at the end of the month, according to a news release.
“Our vision for Plated includes an expanded set of products that goes far beyond a dinner-based solution and into a comprehensive in-house culinary brand,” Geoff White, executive vice president and chief merchandising officer, said in the release. “With a broader scope of offerings, we see Plated solving customer demands around convenience, lifestyle and cooking experience, while adding yet another layer of interest to our in-store journey.”
Developments in the overall grocery landscape — particularly struggles by meal kit subscription companies and private label growth — provide context for the new direction for Plated.
Meal kits
Delivery logistics for fresh meal kits have always been challenging, and customer retention is another struggle that has been well documented.
Blue Apron, the biggest brand in the meal kit space, recently reported third-quarter net revenue of roughly $99 million, down from more than $150 million for the same period in 2018. The company has slashed its marketing spend this year as it tries to cut a path to profitability, but Blue Apron still lost about $39 million in the quarter.
Meal kit business Chef’d had made big waves with several retailer partnerships but ultimately closed down abruptly in July 2018 after running out of money.
Along with Albertsons buying Plated, there have been other large acquisitions in the meal kit space; in 2018 Kroger purchased Home Chef and Ahold Delhaize partnered with HelloFresh.
The bright side for retailers who have invested in meal kits is that consumers are still interested.
“Meal kits are no longer a niche offering; in fact, our data shows that 12% of consumers have purchased a meal kit in the past six months, an increase of 33% from December 2017,” Meagan Nelson, associate director of fresh growth and strategy for Nielsen, said earlier this year in a news release. “The category has seen sales growth of 36% from 2017, with U.S. penetration up an additional 3.8 million households. In-store purchasing is a key driver, accounting for 60% of this growth.”
Private label
IRI released earlier this month a report on how consumers view store brands, and the results help explain why retailers are increasingly leaning that direction.
Sixty-five percent of millennials said they often buy private-label goods instead of name-brand ones, and 67% of Gen Z consumers do the same, according to IRI’s report. In addition, the company found that more than half of Gen X consumers, millennials and Gen Z shoppers actually choose where to shop based on a retailer’s private-label offerings.
Private-label dollar sales grew 3.8% this year — not as much as in 2018 but still well ahead of national brands (1.9%). Shoppers of all income levels and generations buy private-label products to save money, but the purchase decision involves more than price, according to IRI.
“In a 2019 PLMA survey, two-thirds of consumers agreed with the statement, ‘In general, store-brand products I have bought are just as good, if not better than the national version of the same products,’” IRI wrote in its report.
Store brands are not only attractive due to price, however. In an ever-growing sea of brands, they can become the go-to option.
“Shoppers trust the store, and loyalty to private brands grows as they try additional items,” IRI wrote. “They try, they like, they repeat the purchase.”
Related
Albertsons sees digital and e-commerce sales grow 33%
Albertsons names president, CEO