January, 1999

From the Editor

Specialty Foods In Deli

The impact of specialty foods on deli is an often neglected area in analyzing merchandising, procurement, and operational opportunities for supermarket delis. The deli industry often seems divided between the traditionalists who see sliced meats and cheeses as the heart and soul of the operation and the avant-garde who look to meal replacement as the source of future growth.

Though both factions have a case, each perspective is limiting. One of the ways they limit themselves is by neglecting the important relationship between specialty foods and the deli operation. If you want to see what products are going to be hot and happening in supermarket delis next year, take a look at what is stirring the specialty food industry this year. Just as social trends so often start in California and spread across the country, many food trends start in specialty food stores and spread across retailing.

That’s why so many supermarkets send representative to the Fancy Food Shows. In some sense, you don’t even have to speak with anyone at the shows. Just walk down the aisles and count. If you see olive bars everywhere, then start thinking about how you are going to catch the crest of the wave. If last year everyone featured hot sauces and this year it’s hard to find one, that wave is on the way to crashing.

Delis, however, have a special role in dealing with the specialty food industry. In many cases, delis are the transitional portal through which specialty food products transition from specialty food stores to mass market supermarkets.

The reason for this role? Slotting fees play a big part. But the overall procurement and distribution system plays a role as well. There are exceptions, of course, but by and large, small manufacturers’ and importers dominate the specialty food industry.

Not only is there no money for big slotting fees but there is not even the personnel resources to go through the complicated committee-driven buying process of many supermarkets chains.

So how does a manufacturer with hot product selling well in specialty food stores get into supermarkets? Smart ones often try the deli.

How supermarket delis respond to these facts of life will help determine the success of thousands of specialty food manufacturers and importers, but also, the response by deli retailers will determine the success of the deli and of the supermarket in general.

Delis have an important role in selling specialty foods: They provide crucial high-volume shelf space.

Yet all too often, that power is used almost as an afterthought. This is a shame because these little items can make a difference on where consumers shop.

Truth be told, most delis don’t do much to distinguish between their turkey sandwich and someone else’s. So, the right specialty food accoutrements can be the key to capturing the customer in a world of parity products.

Delis, however, can take this set of circumstances, give it a push and really distinguish their operations. The key: The integration of specialty foods into the deli operation.

Most supermarkets with a sandwich board promoting straight sandwiches are putting themselves in a perilous position. After all, it means that the only reason for people to come from you is good location, good price, large portions, or superlative service.

Smart operators, though, are increasingly looking to showcase their own signature items. Calavo, the big California avocado shipper, used to run brilliant ads in foodservice publications. The concept was simple: on the left hand side of the ad spread, they would show something basic, such as a simple breast of chicken on a roll, and under the dish write “Chicken sandwich, $1.89”. Then on the right side of the page they would take the same sandwich , add some avocado slices, salsa, and garnish and write something more upscale, say, “Chicken Mexicana, $3.89”.

The illustration, of course, is that the accessories often determine value. So, deli operators are wise on many levels to develop signature sandwiches, use unusual marinades and rubs in poultry and other prepared items.

Now, the opportunity is to take this to the next step. By finding interesting products and integrating those into the deli offerings, delis can hit a triple: First, the unique items may be the differentiating factor to drive customers to any given deli counter. Second, the use of these specialty foods makes it difficult for consumers to compare prices, and thus opens door to higher profit margins. Third, the introduction of consumers to specific specialty foods via deli programs creates awareness and consumer demand for the actual product, which, of course, should be easily acquired right at the deli counter.

NASFT’s Fancy Food Shows is in San Francisco this month, and additional Fancy Food Shows are in Chicago and New York later this year. The big Anuga show in Germany takes place this fall and there are countless other opportunities to get on top of the happenings in specialty foods. It’s your choice. Is your deli going to be on top of the trends or scramble to catch up?  DB