As meal kit startups cut into their revenue, U.K. grocers are fighting back. HelloFresh is launching £10 meal kits in partnership with Sainsbury’s, following similar tests by Waitrose and Tesco last year. Similarly priced to HelloFresh’s home-delivered offerings, the kits will be sold at 35 Sainsbury’s stores in London and the South East and will eventually expand nationwide.
Like their American counterparts, U.K. consumers have been receptive to the concept of meal kits, which provide convenient shortcuts to home-cooked meals. Spending on HelloFresh and similar services surged 65% in the first half of 2016, and meal kit buyers spent 2.8% less at supermarkets than in the previous half. As a result, grocers are trying to gain back that revenue. Tesco said its trial went well, although Waitrose ended its version after finding customers responded better to meal suggestions.
Whether Sainsbury’s succeeds at selling meal kits may come down to whether the grocer has the digital skill set to promote the products as well as Hello Fresh, which focuses on social media tactics to encourage sales. While L2’s Digital IQ Index: Retail Europe places Sainsbury’s in the Average category, the study also notes some encouraging signs of digital prowess, such as the brand’s “superb” on-site customer service and wealth of shoppable recipe options. Additionally, the grocer is one of just five brands in the study directing all traffic to its e-commerce enabled site, rather than a non-shoppable alternative.
Tesco also scores high in L2’s ranking due to an early investment in e-commerce that paid off with best-in-class account and loyalty features. The brand has also figured out how to make Twitter work for customer service at a scale that dwarfs every other brand in the Index.
Yet even if these grocers can contend with HelloFresh and other meal kit startups, their real competitor is Amazon. Sainsbury’s has made moves to compete with the e-tailer in digital. After Amazon Fresh entered the U.K. market offering same-day delivery to certain areas of London and Surrey, Sainsbury’s introduced rival service “Chop Chop.” However, as in the U.S., that may not be enough to stay ahead.