Slicing the Strawberry: The Price of Lifestyle

While in London last month—with my still jet-lagged wife sleeping in the hotel—I went down for some snacks we could share when she woke up. From the café across the street, I got some (bad) spelt croissants and two lattes, which ran me a steep 25$. From the Waitrose grocery store just next door, I bought fruit, yogurts, water, and some other items—basically a full bag of groceries—for only $15.

It’s not like I was shocked by the price difference, and I’m not comparing the sit-down experience of a café to buying raw materials at a grocery store and making a meal myself. But it definitely made me think about how we have evolved into a society that has an ever-increasing willingness to pay more for these lifestyle habits: the convenience of having prêt-à-porter items at our fingertips. And that tolerance to pay a premium for curated, ready-made items has gotten so high that the grocery stores are also getting into the game.

Filling the Cart

Take the strawberry, for example.

I recently found myself around the table at a grocery biz brainstorm dinner. The aim of the event was to discuss the disruption they are facing in that market; namely that people aren’t buying groceries the way they used to. Millennials are ordering UberEATS or subscribing to meal-prep-in-a-box services, like Hello Fresh, that deliver all the prepped dinner fixings right to their door.

So where does the strawberry fit into all of this? During that event, I learned that grocery stores are quickly moving up the value chain. We know that a package of fresh strawberries sells for about $3. But if you take those same strawberries, remove their hulls, and slice them, you can sell them for 5$. If you add pineapple to the mix, you can sell the container for 8$. And if you set up a juice bar, you can turn half of those strawberries into a smoothie and sell it for 7$. I’m sure you know a store near you that is selling $10 containers of fresh juices made with posh ingredients (formerly known as produce) like kale and ginger.

It made me think: At the end of the day, it's still the same strawberry. Like the boiling frog in the fable, we too are slowly warming to the idea of spending more and more to buy items that rank higher on the supply chain. Rather than opting for "some assembly required," we want the final product, ready to go, with a cherry on top.

Somehow our willingness to pay for our lattes, smoothies, and our gourmet takeout sandwiches has gone higher and higher—to the point where we're willing to pay so much, that mass market retail feels they need to get into the game. Like the frog, we’re in deep; and our draw to the warmth of premium products is increasing—seemingly without notice. But it’s not just about groceries; many industries are stepping up their value chain game and getting closer to the end-product being consumed.

Disney’s Deep Dive

Take Disney, for example. Instead of running their content through the cable providers and movie distribution companies, they’ve launched Disney+, their own streaming service that hopes to give Netflix and others a run for their money by offering personalized, made-by-Disney content. They want to own the customer relationship, curate, and personalize the experience—and grab as much of the margin in that value chain that consumers are willing to pay for.

Thanks to technology, the different elements of this value chain can come together and optimize the supply chain. Your kids like Disney films? If you're getting a streaming service right from Disney, then you can rest assured you're getting a library of the latest Disney films without having to procure and curate them yourself.

That’s not unlike our grocer. I’d sooner buy a sandwich in the local grocer next to my office than get one made in a takeout restaurant. I like the products at the grocery store. I buy fresh ingredients from there almost every day to cook at home. Why shouldn’t they sell me that sandwich? I’ll even spring for the strawberries. Sliced, of course.