Walmart to expand meal-kit service

Posted: March 6, 2018 at 1:55 a.m.

Walmart Inc. is taking a bigger step into the meal-kit market with plans to expand a service it had been testing in some stores to more than 2,000 locations by the end of the year.

The Bentonville retailer's pre-portioned kits and "one-step" prepared meals, which are now available in about 250 locations, will roll out nationwide as part of Walmart's efforts to compete with and others for grocery sales.

The selections are assembled in stores daily and available in the deli section or through the company's online grocery pickup service. The kits and prepared meals cost between $8 and $15 and are aimed at customers who are searching for dinner options that are simple to cook at home, joining a growing list of grocers and startups offering similar options.

"We've looked at these meal solutions before, but we haven't been happy with the quality that's been in the marketplace," said Tyler Lehr, Walmart senior vice president and general merchandise manager of deli services. "We wanted to make sure we had a quality product that we were going to be able to really be proud of."

Walmart's meal kits were developed in its Bentonville Culinary and Innovation Center over a two-month period, then tested in stores across several states over the past several weeks.

The meals have been divided into three categories. There are four pre-portioned kits for customers to cook, two designed to be combined with the company's rotisserie chicken, and 10 "one-step" meals that just need to be heated up.

The four pre-portioned meals are steak Dijon, basil garlic chicken, pork Florentine and sweet chili chicken stir fry. Thai curry chicken and chicken fried rice can be made with the rotisserie chicken. The one-step meals include chicken enchiladas, meatloaf, chicken alfredo and pot roast.

The selections are available in about 50 Walmart locations in Arkansas, according to a company spokesman.

"We're going to learn from what it is that we have," Lehr said. "We'll probably bring more items in the future. There might be some items today that we decide we want to tweak and make adjustments to. But we definitely have room for more options."

Walmart is trying to tap into a business that has gained popularity in recent years as consumers look for convenient options to cook at home.

Meal-kit sales have grown to about $5 billion a year, according to a report from market research firm Packaged Facts, and the industry has been led by startups like Blue Apron and HelloFresh.

Ken Shea, Bloomberg Intelligence's senior food and beverage analyst, said a growing number of U.S. food manufacturers and food retailers are pursuing the at-home food preparation market as well.

"It's a market that is consistent with growing food consumer preferences for fresh and healthy foods that require minimal preparation," Shea said in an email.

Amazon sells third-party meal kits on its website and introduced a selection of its own pre-portioned kits last summer, while grocery store chain Albertsons acquired startup Plated for about $200 million in September. Kroger has been offering its own brand of meal kits in some stores as well.

Walmart's first exposure was in offering meal kits from third-party companies -- California-based Takeout Kit and Chicago-based Home Chef -- on its website beginning late last year. Those items will remain, according to Lehr. Walmart also has sold frozen meal kits under the Great Value brand.

Grocery analyst David J. Livingston said retailers like Walmart are searching for ways to maintain their market share in the grocery industry as online shopping, grocery delivery and pickup grows rapidly. Livingston doubts Walmart's meal-kit offerings will have a significant impact, questioning whether the retailer can "pull this off properly."

"This is mostly a 'me too' move to keep up with other retailers," Livingston said in an email.

But Lehr said Walmart's decision to step into the meal-kit space has been calculated and believes the retailer will deliver a "high-quality solution" for customers.

"It's no secret that other retails have been out with those offerings, but getting the price-value equation right, the quality right on these items has been something we weren't going to make a step unless we were comfortable," Lehr said. "If you disappoint the customer on quality, it takes a long time to get that back. So these are products we're very comfortable with."

Business on 03/06/2018