Albertsons Cos. is getting out of the meal-kit subscription business, focusing instead on selling more of its Plated-brand meal kits in stores.
The grocery chain operator will phase out the online subscription service—once the heart of the Plated brand—by the end of this month. The Plated website directs visitors to a page where they can enter a ZIP code to find Plated meal kits at local stores.
The meal-kit company specializes in packaging ingredients for dinner recipes consumers can prepare in about 30 minutes. As part of the move away from the subscription model, Albertsons says it will transform Plated from a dinner-based service into “a comprehensive in-house culinary brand that will join the company’s Our Brands lineup of private-label products.” Albertsons also plans to expand the Plated brand with new products and make them available in additional stores next year.
As the Plated portfolio grows in the store, its products will be available online through each store’s existing ecommerce platform, Albertsons says. Those platforms include home delivery of online orders—which Albertsons offers using its in-house staff and with vendors, including app-based delivery service Instacart—and Albertsons’ Drive Up & Go at-store pickup service.
Consumers seem to like picking up their meal kits in grocery stores. During the 52 weeks ending Dec. 29, 2018, the number of in-store meal-kit users jumped by 2.2 million households. According to data from research and polling firm Nielsen Co., those in-store buyers accounted for 60% of the overall growth in meal-kit users, Nielsen said. In 2017, 67% of meal-kit buyers purchased them exclusively online. A year later, that dropped to 60%, Nielsen found.
Selling meal kits is “also another way grocery retailers make their stores a destination. For Albertsons, moving Plated into the Own Brands Group could also represent a bigger opportunity to expand beyond ready-made meal kits to other convenient food or freshly prepared food,” says Julie Companey, director of grocery marketing at marketing and media company Valassis.
Offering meal kits also can help grocers appeal to millennial shoppers, Companey says. She cited a late 2018 survey by grocery delivery service Peapod LLC. The survey found twice as many millennials (60%) as baby boomers (31%) expressed an intent to buy a meal kit in 2019.
Earlier this year, Kroger Co. began selling meal kits from its Home Chef unit to 500 additional Kroger-owned stores in markets across 15 states and allowing customers who buy the kits online to customize their meals.
The decision to formally bring Plated into the company’s lineup of Our Brands comes after testing of the meal kits’ in-store performance in its Safeway stores in Northern California, according to a statement from Albertsons. The company found shoppers who buy Plated products are more likely to have families and tend to buy more groceries than the retailer’s average shopper.
Albertsons’ Our Brands lineup includes the O Organics organic food lines, Lucerne dairy products, hundreds of products offered under the Signature Select brand name and Signature Café ready-to-serve entrees. The Our Brands portfolio has been a vital source of growth for Albertsons. The company says Our Brands penetration grew from 23% of sales in 2017 to 25.3% for the quarter ended June 15. Albertsons says it launched about 1,100 Our Brands items in 2018 alone.
Albertsons operates stores in 34 states and the District of Columbia under 20 banners, including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen and Carrs.