Pizza is a staple food in most American households. Over the next 12 months, the average American will eat 46 pizza slices. It’s surprising then how few mainstream supermarkets have taken the steps needed in merchandising to capture the refrigerated pizza purchase occasion, which is related to, but different from the frozen and hot pizza purchase occasion. In contrast, Wal-Mart has achieved out-sized success with refrigerated pizza offerings in their prepared foods and deli area, branded as Marketside Pizza. All told, refrigerated pizza in supermarkets accounted for approximately $500M in 2016, and this category grew 6% compared to previous years. While frozen pizza is much a larger $5.5 billion category, it has been struggling with declining sales.
Wal-Mart is the significant category leader in the growing refrigerated pizza market. Let’s explore what makes its refrigerated pizza offering so successful.
In supermarkets, consumers have up to three pizza purchase options:
- Frozen, in the grocery store freezer
- Refrigerated, in the prepared food or deli section
- Hot, at an in-store foodservice eatery
Consumer Insight: Different Temperature States Suggest Different Consumption. Refrigerated Pizza Can Lead To Additional Purchases
Dual purchasing consumers (those who buy both frozen and refrigerated) are the most valuable. And two-thirds of the consumers who purchase fresh, refrigerated pizza will cook and serve it the same day. This is very different than frozen pizza, where only 20% of frozen pizzas are for same day use. And hot pizza is usually purchased by the slice to eat immediately, or within the hour. While there are a large number of consumers who only buy frozen pizza, and a smaller number who only buy refrigerated, the biggest market opportunity lies in understanding the different occasions for each purchase and capturing dual-purchase consumers.
Both refrigerated and frozen pizza must meet consumers’ basic requirements of value for the price, toppings, crust preferences, etc. However, refrigerated pizza is more likely to be associated with superior freshness and high-quality ingredients, while frozen pizza is often seen as a great item to stock up on for quick meals or snacks.
Consumers expect to spend a bit more for a refrigerated pizza, compared to frozen. For instance, an extra-large Marketside Ultimate Meat Pizza costs $8.98, compared to a range of $2.98 to $7.48 for various, smaller-sized frozen pizza brands.
Marketside delivers on value with lots of meat for that higher price point.
How Wal-Mart Successfully Merchandises Refrigerated Pizza to Capture Same Day Purchase
Wal-Mart shows great understanding for the purchase occasion for refrigerated pizza. Its massive, high visibility displays placed in the perimeter capture shoppers’ attention as a good option for a convenient, same-day meal. Beverages are also often at hand to complete the meal purchase. The large assortment of topping and crust options meet most popular consumer preferences, making a quick purchase decision fairly easy. And, the packaging often features cross-promotion with characters and movies, such as Marvel’s Avengers.
Gina Kinslow, grandma of a large family and frequent purchaser of Marketside Pizzas gives insight into why she appreciates the product:
“Everyone loves pizza—from my three-year-old grandsons to my 20-year-old granddaughter. When I know the whole family is coming over for the day, a pizza from Wal-Mart makes a great, fast lunch. If I’m cooking dinner, I don’t want to also have to cook a meal for lunch. When would I spend time with the kids? Frozen pizzas aren’t big enough to feed everyone, but the Marketside Pizza has enough toppings that one slice is often enough (except for my growing 15-year-old grandson!). And I like to add extra toppings to the pizza, too, like a special cheese. Just to make it more fun.”
Essentially, Wal-Mart’s Marketside Pizza catches the consumer’s eye, so they decide to buy it and make it the same day. Same day is important, as supermarkets experience more demand for their prepared foods starting at lunch and then extending into the afternoon and dinner time.
Once they are familiar with the idea, some customers (perhaps Gina) may even make a special trip for the refrigerated pizza, but most will pick it up as part of a multi-item shopping occasion. This may a big shopping trip, or a quick fill-in.
Often, supermarket retailers have refrigerated pizza offerings buried in a refrigerated case with limited facings (e.g., two to six pizzas). These retailers make it highly unlikely that consumers will happen upon the product and decide to buy. And, these same retailers are (not surprisingly) struggling to make refrigerated pizza a success in-store. Wal-Mart’s dedication to merchandising allowed this category to become an out-sized success in its stores and a much faster-growing segment than for most competitors. A clear opportunity exists for other supermarkets to tap into this latent demand.