Oct 29, 2018
Are Subscription Meal Kits Doomed?
It’s no secret the subscription-based fresh meal delivery kits are facing struggles. Retention rates are low, many find them too expensive, and these companies are working overtime just to bring in new customers with deals and incentives. Now the latest wrench being thrown in the mix are non-subscription kits consumers find in grocery stores adding to the competitive pressures. Is the subscription-based model doomed?
I say not so fast. Since these services started I often said the market is going to change from its original form and it’s doing just that. When we published our first report on meal kit delivery services in 2016, we found nearly two thirds of meal kit users would have made a meal from their pantry had they not used the kit. That speaks to their highly competitive nature with grocers, from which we predicted the tighter cooperation between meal kits and grocers we see today.
At the same time, the top motivation for trying these kits was the fact that all the ingredients were provided. In other words, these kits provided a solution to the consumer, saved them the trouble of determining what the dinner meal would be, and also provided everything needed for that meal. And by the way, it saved the consumer a trip to the store, which equals time back in their day.
But not everyone wants to be locked into a subscription, especially when the dinner meal decision is typically made at the last minute. By 4:30 pm on a typically day, most US consumers haven’t decided on their dinner meal yet. Retailers, looking to gain from this have started to introduce their own kits or sell existing meal kits in their stores. They not only capture the last-minute deciders but also showcase themselves as meal solutions providers as opposed to places that merely sell products. And meal kit users are taking notice. Our updated report on meal kits, What’s Next for Meal Kits?, says 59 percent of recent meal kit users are giving in-store kits a try.
I believe we’ll still see subscription-based meal kits in the coming years because they offer a convenience and solution a growing number of consumers seek. However, they will also need to be part of the growing in-store meal kit trend. Just like retailers are finding ways to be present both online and offline, meal kits need to be on the same journey.