May, 2001

From the Editor

Identity Crisis

Chicago in May poses an annual identity crisis for the supermarket deli executive. If one can only go to Chicago once in the month, does the ambitious deli executive go to the Food Marketing Institute (FMI) convention or the National Restaurant Association (NRA) event?

To be retail or to be foodservice? That is the question.

On the retail side, one needs to see and learn about the environment in which one is operating. One can go to the International Dairy Deli Bakery Association (IDDBA) event in June for deli-specific items and deli-specific equipment. But what is hot in grocery, in other perimeter departments, in retail packaging and to learn what is the impact of warehouse clubs and super centers, the deli professional really needs exposure to an event like FMI.

Deli is, of course, inherently both retail and foodservice, and only by recognizing that can the full potential of supermarket deli departments be realized.

Part of the problem for supermarket delis – and thus for the supermarket chains that count on delis to attract and retain customers – is the degree to which the interests of the deli can deviate from those of the store at large.

Probably the most obvious example of this type of dilemma is the issue of building drive-thrus for supermarkets delis. There is really no question that these would increase deli sales and be well worth the cost. Many fast food operations do the bulk of their business through a drive-thru – some in fact, with a double drive-thru concept.

So why don’t delis have drive-thrus? Because to a supermarket executive, the whole point of the deli is to pull people into the store and sell them other items. Remember the lack of supermarket deli drive-thrus the next time you go to a seminar and hear a supermarket CEO saying that his company is a customer-driven organization. That CEO may think so, but it is rarely true. Not only don’t supermarkets usually have deli drive-thrus, but all too often the delis are put in the back of the store with the specific goal to make people pass lots of other stuff before the consumers can get what they want.

The funny thing is that there really is no evidence that today’s consumer is easily manipulated in this way. If a salad bar is placed inconveniently and people need salads, they know how to go through the drive-thru at Wendy’s and pick one up. Isn’t it at least possible that a true consumer-driven attitude – in which the store’s drive-thru window would cater to people’s need for quick food products on the way to work or during times when there are three children all buckled in car seats – would enhance loyalty to a particular store?

One of the interesting distinctions is the divergent meaning of product offerings at the FMI and NRA. At FMI the exhibitors have products out, and those are the products they sell. Sure they may do a custom pack for a warehouse club or private label order, but, generally, the model at retail is that manufacturers produce the products they want to produce, retailers buy the products and keep selling the ones that move.

Unfortunately, space both in the case and in ads is very valuable, and staff has only the capacity to be knowledgeable about a limited range of items. In addition, multiple offerings often slow down service.

Yet, it is not uncommon for supermarket deli operators to carry multiple versions of the same item. I don’t mean one boiled ham and one baked ham; I mean four different price points on the same basic type of ham.

At NRA, manufacturers display many products and, of course, they are sold to restaurants both big and small. In a sense, however, all these products are P.R., letting the world know that these manufacturers produce poultry products or appetizers. For, in many cases, restaurant chains expect to be integral partners with the producers in creating custom product for the usage intended and the demographics and psychographics of the intended consumer.

Subway is in many ways one of the closest competitors for supermarket deli operators. Nation’s Restaurant News ran a great little piece in its “Brands in Foodservice” supplement explaining how Jac Pac came to be the exclusive supplier of roast beef for the 13,000 Subway sandwich shops.

In a capsule, Jac Pac was one of seven suppliers of roast beef to the chain. Eventually Subway wanted to narrow its supply base and so selected three to be roast beef suppliers. Jac Pac was one and had a whole muscle product whereas the other two had a sectioned and formed product.

When Subway decided to raise its standards, it created its own specifications, then invited its suppliers in for a talk. What Subway wanted didn’t exist – Subway was seeking the terrific flavor and texture of a whole muscle product but the “consistency of slice” that typified the sectioned and formed roast beef. Add to all this that Subway wanted a low fat roast beef!

It was a struggle and involved a year’s work and lots of testing but now Jac Pac has a giant customer and Subway has a product it can sell.

Much attention is paid at retail to knowing one’s customer – but it is typically approached as a marketing or product selection tool. But what the foodservice industry points out is that knowing one’s customer is integral to product development.

If what your deli is selling is simply what is off the rack, you probably don’t have the optimal product offering. And that is important whether you come down on the retail or the foodservice side.     DB