Supermarket’s Latest Weapon: Cooking Classes.

In the face of ferocious competition from warehouse shopping clubs, some supermarkets are trying to create a sense of community in their stores, offering cooking classes and enhanced personal services.

Several industry observers say such moves are a step in the right direction for supermarkets, but others wonder how much they can emulate warehouse clubs, which, in addition to selling groceries, offer services like auto insurance and travel agents, as well as selling housewares, electronics, tires, and many other goods that supermarkets don’t.

Over the years, supermarkets have added services such as banking and pharmacy, and they’ve struck partnerships with eateries such as Starbucks and Boston Market. The strategy is for supermarkets, which usually can’t compete on price with warehouse clubs and superstores, to create one-stop shops for consumers.

But clubs such as Wal-Mart’s Sam’s Club and Costco Wholesale Corp. have added financial services, prescriptions, and other services to build member loyalty. Costco, for instance, has partnered with financial service companies to offer discounts on home and auto insurance.

“We continuously try to add value to our membership and perhaps someone will join Costco because of these services,” says Patrick Callans, vice president of membership services at Issaquah, Wash.-based Costco.

Can supermarkets do the same? Bill Bishop, a Barrington, Ill.-based consultant, says that “supermarkets offer a transaction-based service and that’s the problem they are faced with. They need to start thinking of club-like services.”

Robert Keane, a spokesman for The Stop & Shop Supermarkets Co., a 350-chain based in the northeast, says that Stop & Shop is trying to imitate warehouse clubs, to a point. “We’re adding as many services as possible under one roof,” he says.

Recently, the chain announced it would sell office supplies via retailer Staples. It also rents space to Dunkin Donuts and Boston Market. In addition, the company is redesigning its health and beauty section to emphasize the “health and relaxation” aspect of the category.

“Do we have or are we creating a club-like mentality?” Keane asks. “That’s an interesting question. I do think we bring in customers by the different kinds of things we offer in one place.”

Stop & Shop is also adding computerized devices mounted on shopping carts that allow a customer to record purchases as they shop. By swiping a loyalty card at the checkout, the cashier can tally up her purchases without having to scan individual items. “Differentiation can create a club mentality,” Keane says.

Cooking classes are another way to differentiate from the warehouse clubs. “This is a natural service supermarkets can offer,” consultant Bishop says.

Specialty food stores Wegmans Food Markets, based in Rochester, N.Y., and Talin Market World Food Fare in Albuquerque, N.M., offer cooking classes.

Talin, which sells food products from around the world, offers cooking classes to help its customers navigate through various cuisines they may know little about but want to learn.

Talin’s cooking class is run by a local chef, who brings in other chefs who instruct students on dishes from hors d’oeuvres to sushi. The store offers the ingredients featured in the classes. “It was a combination of our customers asking for classes and us thinking it would be a good service to offer,” says Victor Limary, operating director of Talin.

The supermarket built an on-site kitchen to hold classes. “It’s a complete experience for the customer, but I’m not sure this would work for every supermarket,” Limary says. The supermarket charges $15 on average for a two-hour class.

Limary says that cooking classes makes sense for specialty food markets — not necessarily supermarkets — because of the mass-market nature of large grocers. “It’s not going to work for stores that carry commodity products such as macaroni and cheese,” he says.

Mainstream supermarkets have been getting “killed” by Wal-Mart and wholesale clubs, says Dave Hirschkop, president of a specialty food manufacturer. “The specialty food stores do [cooking classes] as a point of differentiation and supermarkets have to do what the discounters and clubs aren’t doing.”

Before supermarkets consider offering classes, they need to look at their demographics and examine what section or products in the stores are generating the most money. For instance, if specialty products are a top seller, customers might attend cooking classes, Hirschkop says.

By Kathleen Kiley, Managing Editor, Consumer Markets Insider
Courtesy of http://www.kpmg.com