Omaha Steaks: Multi-Channel Expansion
Quickly adapting to technology innovations has allowed Omaha Steaks to build a prospering 21st century sales and operating model
Omaha Steaks was founded in 1917 and continues to be a successful family-run business manufacturing, marketing, and distributing premium steaks, other meats, and gourmet foods. Over the years, they have stayed true to their company mission to “deliver exceptional experiences that bring people together.” The company is focused on superior products and personalized service as they execute sales of grain fed, USDA-approved, Midwestern beef. They guarantee freshness via vacuum packaging and guarantee premium flavor and tenderness through in-house aging processes.
The company has grown substantially from a supplier of local restaurants and grocery stores to a multi-channel marketer of high-quality steaks with annual sales of $450 million (2014 fiscal year). They have expanded to three manufacturing plants, a distribution center, a freezer warehouse, 80 retail stores, and significant online marketing and retailing. Omaha Steak’s business success is largely due to its changing operating model; primarily, Omaha Steaks has grown by implementing new packaging focused on preservation, adapting to technology channel growth, focusing on local sourcing and premium quality, and maintaining tight control over in-house operations.
Packaging Innovation to Guarantee Freshness:
In order to expand its geographic market reach while maintaining premium local sourcing, Omaha Steaks first transitioned to shipping wax-lined cartons with dry ice. They transitioned packaging again when they discovered insulated polystyrene containers and vacuum packaging. These changes increased inventory planning flexibility by prolonging the shelf life, helped improve quality to the end consumer by maintaining freshness and tenderness, and helped broaden the marketing channels that Omaha Steaks could use when selling steaks to consumers. The vacuum-sealed packets are 100% air-tight and can withstand varied weather conditions; the steaks are flash-frozen to capture freshness and flavor at its peak; retail stores can keep steaks fresh in the freezer, avoid freezer burn, and allow the consumer to store steaks before consumption for up to 3 months. This pre-cooked offering also appeals to the growing consumer interest in ready-to-eat foods.
Technology Pioneer in Implementing a Multi-Channel Marketing Approach:
As mentioned, vacuum-sealed packets were the underlying enabler for continued growth. The simple butcher shop evolved over time, as consumer buying behavior shifted, to include: Catalog and direct mail, B2B gifts and incentives, Retail stores and food service, telemarketing, and online. They were one of the first to introduce each and every technological improvement from mail ordering and toll-free numbers to telemarketing, fax, email, and, finally, online and retail stores. Today, they are continuing to research and expand in social media, including Facebook and Groupon. They still offer all direct sale options to uphold their premier customer service model and to supply each and every customer in whichever way they prefer best. The sheer number of channels is a key differentiator for Omaha Steaks amongst its loyal customer base; their packaging techniques, long term storage capabilities, and direct contact with consumers has allowed them to keep up with technology innovation and always supply the new customer need.
Local Sourcing and Quality:
Consumers are increasingly seeking locally sourced products, and there is an increasing preference for healthier alternatives. Omaha Steaks can easily answer this growing demand for local products being centrally located in Omaha, Nebraska, best known for its beef and corn. In addition, they have used their competitive advantage across marketing channels and operating structure to add additional offerings to their product line: leaner beef, chicken, pork, seafood, and protein-filled alternatives. They have again adapted over time to changing consumer demands in line with what their operating model can support. Omaha Steaks now sells about 400 products will a continued focus on quality and freshness.
Tight Control over Operations:
Finally, Omaha Steaks maintains in-house control over all aspects of operations and owns every customer touch point to ensure the best product quality and customer experience. They source, cut, manufacture, package, age, and ship their meats, and they own the online aspects, IT, call centers, customer service, and R&D. Omaha Steaks considers the aging of its meats to be proprietary R&D as it requires significant expertise and time; many of their successful marketing strategies are tied to competitive advantages such as this. They trim meats to exact customer specification, offer to ship fresh or frozen, and offer a 100% satisfaction guaranteed return policy. None of these flexible and customized offerings would be possible without an operational strategy that supports premium quality, personalized customer service, and increased flexibility.
Sources:
“Omaha Steaks Scion Explains The Intensity Of Working For Your Family’s 95-Year-Old Business”. Business Insider, Kim Bhasin. Oct 12, 2012. http://www.businessinsider.com/omaha-steaks-interview-2012-10
“Omaha Steaks: Carving Out a 21st Century Sales Model”. The Street, Laurie Kulikowski. Jul 30, 2012. http://www.thestreet.com/story/11642396/1/omaha-steaks-carving-out-a-21st-century-sales-model.html
Omaha Steaks: Corporate Profile. Cris Hay-Merchant, Brand and communications Director. Omaha Steaks International Inc. 2015. https://www.omahasteaks.com/gifs/OmahaSteaksCorporateProfile.pdf
Omaha Steaks International, Inc. website. http://www.omahasteaks.com/shop/
Great post Meghan!
Having lived the last 3 years not too far from an Omaha Steaks Retail Store, I received weekly coupons in the mail for their packaged bundles of varying sizes – a certain number of steaks, twice baked potatoes, sometimes even desserts etc. Given the size of my freezer and the size of these packs I was never able to buy one. However I expect with the increase in consumers looking for and buying in bulk, there is a lot of value in such bulk bundle packaging. In your research did you find anything attributing the growth of Omaha Steaks to the introduction of these bundle packages? Obviously quality is key for repeat buying, but I’d be curious to know whether these strategies to get the consumer to buy more than one steak at a time has also lead to some of the substantial growth?
Super interesting. Interesting to see that they manage to export their product without losing any of their quality. How scalable do you think the business can be? It’s also interesting to notice that, similarly to wines, steaks (internationally) are usually judged by their region of produce. Do you think their positioning outside of the U.S can be negatively affected by that?