- Grocery prepared foods departments could be uniquely positioned to steal market share from national chains like Domino's and Pizza Hut, according to Progressive Grocer. Retailers often compete on price, and they can offer fresher ingredients and more interesting combinations on their pies.
- There are numerous pitfalls to competing with the big players. Startup pizza chains like Pie Five and Toppers Pizza have had to close stores because they struggled against the deep discounts and perks that Domino's and Pizza Hut offered.
- A Datassential analyst interviewed by Progressive Grocer said retailers should focus on special promotions and on-trend ingredients like Sriracha and roasted vegetables. Research shows nearly half of consumers want customizable pizza, but only 23% of grocers offer this option.
The pizza market is a tasty opportunity for retailers. IBISWorld puts annual restaurant pizza sales at $45 billion, with further growth projected in the years ahead.
Companies that can take advantage of pizza's customizable possibilities with fresh and trendy ingredients will drive growth in the industry, according to analysts. That's good news for the many retailers building out their prepared food departments, where pizza stations often serve as a main draw. Mariano's uses a stone hearth to fire its pizzas, and serves up interesting flavor combinations served atop hand-pulled dough. Publix’s Greenwise Markets offers organic pizzas in varieties like spinach and feta, and uncured beef pepperoni. Wal-Mart's new Neighborhood Market store prototype also includes made-to-order pizza.
But can retailers really compete with dedicated chains like Domino's and Pizza Hut? It won't be easy. These companies know the exact price points, promotions and extras that will motivate pizza customers to buy from them. They also know a thing or two about delivery and quality. Several years back, Domino's did a massive menu revamp that focused on higher quality ingredients. The campaign, whose brashness was encompassed in the tag line "Oh Yes We Did," has paid off for the pizza giant.
Analysts recommend supermarkets focus on unique flavor profiles, but retailers should first make sure their basic cheese pizza stands up to the competition. If the dough, sauce or cheese are lacking in some way, then throwing on extra ingredients won't help. Beyond this, grocers can certainly leverage their fresh expertise and culinary knowledge to offer competitive pies.
Grocers also should think about ways to compete on promotions and even delivery. Deals that combine pizza with a beverage, salad and other items could be a hit. And why not leverage e-commerce delivery and store pickup to push fresh pizza? If Domino's and Pizza Hut can score big with online ordering, grocers can likely do the same.