The rise of the 'grocerant': How millennials impact supermarket growth

An employee scans a smartphone at the express checkout while customers shop on the opening day of the 365 by Whole Foods Market store in the Silver Lake neighborhood of Los Angeles.
Patrick T. Fallon | Bloomberg | Getty Images

Supermarkets no longer want to sell you just the makings for a meal, they want to make your dinner, too.

An increasing number of supermarkets, dubbed "grocerants" — grocery restaurants — are stocking shelves with prepared foods and offering in-store dining, according to a recent study by The NPD Group.

Since 2008, in-store dining and prepared foods have grown nearly 30 percent in groceries — accounting for 2.4 billion foodservice visits and $10 billion in consumer spending in 2015.

The biggest trend in supermarkets is prepared meals, Cheryl Flink, chief strategy officer of Market Force, told CNBC in April.

"The grocers are putting time and effort in this idea of ready to eat," Flink said, explaining that consumers are seeking convenience, an alternative for dining out, and food quality.

Companies like Blue Apron, which provide ready-to-cook items for consumers, are major competition for grocery stores — which could explain the increase in prepared food items at grocery stores in the last few years.

While millennials statistically visit grocery stores less frequently than other generational groups, grocerant options are enticing them into supermarkets.

"Give the millennials what they want — fresh, healthier fare and a decent price — and they will come," David Portalatin, vice president of industry analysis at NPD Group, said in a statement.

Grocerants, which can offer a wide assortment of specialty categories like Asian, seafood and barbecue, received higher ratings for variety, healthy options, freshness and quality than traditional quick service restaurants, according to NPD Group information.

These qualities are important to millennials and will remain a key part of their eating behaviors as they age, NPD Group said.

"Millennials' interest in the benefits and experience supermarket foodservice offers will continue to be strong over the next several years," Portalatin said. "This forecast bodes well for food manufacturers and retailers who have their fingers on the pulse of what drives this generational group."