March, 1998

From the Editor

Natural Foods In Deli?

The perishable departments of supermarkets live with a dual mission. On the one hand, there is the bottom line. I know of no supermarket chain that doesn’t expect deli to contribute to the chain’s overall profitability. On the other hand, however, deli and all perishable departments are charged with a second mission – to serve the entire store by both attracting consumers to shop and to position the store in the mind of the shopper.

If you haven’t been to Natural Products Expo recently, or ever, you may not understand what an enormous business the natural food industry has become. It’s certainly not Hippies in love beads and sandals. It is a big business and a big challenge.

It is a challenge because, typically, supermarkets react to changes in consumption patterns by simply shifting their product lines. If red meat is in and fat is a minor concern, delis will emphasize roast beef, pastrami, and corned beef and push the fried chicken. If the trend is toward dietary concerns, one will find lots of turkey and the hot chicken program will be emphasizing the rotisserie. In any case, astute supermarkets hold onto the business.

The natural foods movement, however, poses some unique challenges for the conventional supermarket or supercenter. First of all, an alternative purchasing venue exists. If I want a sandwich for lunch, within a five minute drive of my office I can hit a supermarket deli, a Wild Oats natural foods market or several smaller health food stores that have set up juice bars and “deli” operations. Note that these are all retail operations that, like a supermarket deli, also offer foodservice components. Right away you see a distinction in the natural foods arena, and there are retailers across America that specialize in this type of cuisine. Supermarkets have no inherent claim on this product line.

Of course, a focus on product itself is probably misguided and, indeed, may be a big cause of the problems supermarkets experience in trying to tap this market.

The natural foods movement is an amalgam of three separate components of American society. There is a counter-culture element, call it the Birkenstock population, of people who recoil at the anonymity of America’s mass consumer culture. These descendents of the 1960’s flower children have long been at the core of the organic and natural foods movement and thus account for the stereotype in which the natural foods business is perceived. They are not, however, alone. Much more powerful has been the addition of two newer streams to the ranks of natural foods consumers.

The alternative medicine movement has a long history. Kellogg’s Cornflakes and many other food staples trace their history to various attempts to use food to ensure good health.

Today, however, people live so long that the likelihood of their developing various illnesses, which might be impacted by nutrition, has concentrated the mind powerfully on the influence of food on disease. Add to this increased knowledge on the nutritional impact of various foods on disease and the tremendous dissatisfaction with an impersonal medical establishment, which often places people in a passive role regarding their own health care, and one sees a second powerful consumer group contributing to the natural food trend.

Finally, the very nature of upscale or gourmet food has changed. If in the 1970’s this movement was characterized by the importation of hundreds of jars of different European specialty foods, today, that definition has shifted. Upscale food is when the chicken is free-range, when the beef is hormone free. Today’s upscale consumer, particularly the younger upscale consumer, wants to tell their friends that they ran out to a natural foods store to get the ingredients to whip up for the dinner party.

Combined, these three cohorts of consumers are powerful. They spend big bucks that supermarkets need to win back and hold onto.

The most likely answer is for all the perishables departments, and especially deli, to be more sensitive to their functioning in helping to position the store in the mind of the consumer.

Alternative products, such as soy-based meat substitutes, have to not only be offered, but also sampled and promoted. Already most delis offer an array of choices in salads and prepared foods – signage needs to be added to let consumers know the products’ composition.

In many cases the overall look of the delis has to be reworked. The signage is too price-oriented to appeal to either the health-conscious or upscale consumer. Insist on using signage to promote the quality of the product, not merely the special of the week. Training needs to be changed as well. Associates have to be better prepared to address the questions of the natural foods consumer.

The objections are obvious and predictable: the soy product won’t sell, price promotions are what move the product, and the associates can’t learn what we are already trying to teach them. Surely there are elements of truth to all of this. Yet all these objections miss the point. The industry stands at a precipice. The small health food store serving those who remember the summer of love has given way to the upscale natural foods markets prepared to skim off the cream of the conventional supermarket business – the consumers who pay top dollar.

If supermarkets don’t move fast to reassert their position with this consumer, that position will continue to be de-emphasized in the mind of the consumer.

How many delis are ready for the challenge ahead?  DB