What Rosarita Refried Beans Taught Me About Food Innovation

I shop for groceries a couple times per week and yet I can’t remember the last time I set foot in a grocery store.

It so happens that living in San Francisco, a city equally enamored with food and technology, has given us access to a staggering array of online services that get us what we want, when we want it, where we want it. From grocery delivery services like Instacart, AmazonFresh, Google Express, and Good Eggs, to ultra-convenient freshly prepared meals delivered by Sprig, The Munchery, and Spoonrocket, to the army of on-demand gofers that is Postmates,

I have joined the outsourcing revolution. And it’s awesome.

These new services have not only radically changed my shopping behaviors (and how I spend my time), they’ve captured my imagination. While they’re concentrated in just a few urban communities today — San Francisco, New York, Seattle, Chicago, and Los Angeles, among others — it’s exciting to think about how they’ll evolve, expand, and ultimately disrupt the retailing industry. For example, how will the online grocery “aisles” look different in the coming years, and how will they affect the real-life shopping experience?

Traditional brick-and-mortar retailers like Target, Walgreens, and Whole Foods are partnering with technology companies such as Google, eBay, and Instacart to get in on the action, causing some very interesting dynamics. For one thing, these technology companies have become “meta retailers.”

They’re now the ones engaging in a direct relationship with the consumer. They provide the service experience on your phone and on your computer. They curate the product assortment. And they’re the ones offering seamless payment and delivery in a matter of hours.

So where does that leave the likes of Whole Foods, Target, and Smart & Final?

Here:

See if you can find their brands on this screenshot.

Because the individual brick-and-mortar retailers are not the ones delivering the experience — nor are their brands really felt on the meta-retailers’ sites or apps — they’re often left competing solely on price.

The same can of Rosarita refried beans on Google Express costs $1 at Smart & Final and $1.22 at Target. Google Shopping Express also shows shoppers the lowest price on top. I love Target as much as the next person, but why would I pay extra for this to come from Target when it’s delivered in the same packaging and by the same nice person in a Google Express uniform when it comes from Smart & Final?

Instacart Plus even goes a step further, searching stores across an entire community for the lowest prices on the same products. They comparison-shop for you, and you never even know where the products came from. By keeping tabs on prices across different retailer categories (from mass grocery, to dollar/value stores, to club), Instacart Plus can attempt to live up to its promise of being “the least expensive option for grocery shopping, period.” I previously never shopped at discount retailers, but I do now.

With low prices often driving purchase decisions on these shopping platforms, how might the retailers differentiate enough to break out of a race to the bottom? Or at least reclaim some of the relationship with the consumer?

The answer might be found in private-label innovation.

While the prognosis for differentiation isn’t great when people search for specific national brands like “Rosarita beans” (same brand, same product, lowest price on top, retailer brand in small grey type), it’s a whole different scenario when people search for “refried beans.”

The idea of private-label brands all but disappears: Smart & Final’s First Street brand shows up next to Target’s Market Pantry next to Raley’s Fine Foods’ private label, next to Rosarita, Amy’s, etc.

These private brands, which used to live in their respective brick-and-mortar stores, placed on a shelf next to branded competitors (often in sneakily similar packages), aren’t really “private” anymore. They’re “real” brands.

On the refried beans search, the private-label brands are all priced within a few cents of each other, and the difference between the cheapest private label and the cheapest national brand is $0.15. While price is certainly a major driver of decisions, I’d like to believe that consumers are just as interested in value, especially when the price differences are so small between private-label brands. Is innovation in private label — whether in product, packaging, or brand identity — an opportunity, even an imperative, for retailers to create more value and differentiate on the “meta retailer” platforms?

By investing R&D and marketing dollars in these brands, essentially treating them like the “real” brands that they are, will brick-and-mortar retailers be able to get people to recognize their brands and even search for them by name?

How might retailers use the meta retailers as a platform for experimenting with their private-label brands, targeting specific consumers and dialing in product offerings with the rich data that comes back?

How might they build their private-label brands through promotions and exclusive offerings on digital channels? And could they do this well enough to drive consumers to their brick-and-mortar stores in those “gap-filling” moments?

While the meta retailers may still be still emergent, well-funded “prototypes,” they’ve managed to create very compelling consumer experiences that can either be interpreted as a threat to traditional retailers or a new design opportunity. Could the meta retailer platforms be the place where retailers and food companies push the envelope on new product forms, flavors, visual design, packaging, and even marketing? Could this be a sandbox where ideas are explored, evolved, and ultimately executed across different channels, both online and offline?

If you’re an executive at a retailer or big food company, I’d love to hear your thoughts. Email me at nicole@ideo.com