HelloFresh has expanded into 600 US supermarkets this month in a bid to reach more customers.
The meal-prep company has battle fierce competition and customer retention woes while trying to maintain its market leading position in the US.
HelloFresh will now be stocked in 581 Giant Food and Stop & Shop stores, mainly in the East Coast, which is the widest launch to date of meal kits into shops.
However, some competitors are already ahead as Blue Apron launched in Costco stores in May, and Plated was acquired by Albertsons with the aim of stocking these meals in store by the end of 2018.
Entering the brick and mortar retail market will undoubtedly help HelloFresh retain its place as market leader in the meal-kit sector, at least temporarily.
However it might not be the solution to all the issues which face the brand. HelloFresh said it will sell meal-kits in store at a price point between $14.99 and $19.99, which is far higher than the ready-made meals also available in stores, which might see the company see similar challenges then with its subscription service when it comes to repeat business.
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Despite being more accessible, it’s unlikely to improve user retention
Companies in the meal subscription market have suffered from low user retention, which was the key reason Blue Apron lost its market leading position to HelloFresh.
Latest figures from HelloFresh state that the company has experienced a 52.9% increase in orders between 2016 and 2017.
While there is no official data from HelloFresh on user retention, 1010data estimates that 50% of first time users stick with these meal kit services for the first few weeks, however only around 10% keep their subscriptions for six months.
While being on the shelves in supermarkets will improve passing trade, it’s unlikely to encourage repeat business. Brand loyalty has been declining in recent years, as a result of the growing choice and increasing price sensitivity.
New entrants will continue to enter the market and challenge HelloFresh
The US meal-kit market is said to be worth $2.2billion, according to USA Today and the competition is likely to continue intensifying.
The growing popularity of meal-kit subscriptions will be an area of concern for supermarkets and, as a result, supermarkets are also beginning to step into the game. Walmart and Kroger have both launched meal kits and “one-step meals” in stores this year, as well as Amazon launching its own meal-kit in 2017, which will be a further concern to these niche brands.