Summer, 1996

From the Editor

A Question Of Recognition

Is the deli/retail foodservice department there to make money or to bring people into the store? This is not a trivial question. It may well be the essential question if supermarkets are to win the war for consumer food dollars.

Home Meal Replacement, or HMR, is a hot industry buzzword. Hardly a deli manufacturer, equipment supplier or retailer can be found without a product or plan designed to capitalize on the HMR opportunity. The truth, however, is that for all the attention being paid to this subject, the most important issue is being ignored: What is the purpose of a deli/retail foodservice operation?

It is easy enough to pontificate on the importance of capturing the home meal replacement market. It is easy enough to bemoan the loss of consumer food dollars to the likes of Boston Market. It is easy enough to fiddle around the margins thinking that some new “meal deal” will turn the tide.

It is, however, difficult – in some ways excruciatingly so – to rethink our basic business. Yet such a rigorous approach is the only way likely to pay off in really extraordinary results.

I work hard. Long hours. Before I leave my office, I may well call Boston Market and order dinner. Then zoom through the Boston Market drive-through on my way home.

Can supermarkets get my personal HMR dinner order? Theoretically, yes, but it will be tough. Look at the obstacles my local supermarket puts in my path: 1) They won’t accept my order on the phone. 2) They don’t have a drive-through. 3) The service deli closes before the store does. 4) Even if the deli is technically open, I can’t be certain it will be fully stocked with freshly cooked items. 5) The deli department doesn’t have most baked goods or beverages or fruit, so I need to walk through the whole store. 6) The deli doesn’t have a separate cash register, so I have to stand in line up front, sometimes behind someone with a shopping cart full of groceries.

This is a serious obstacle course to put before a customer. Solutions to the challenges facing delis, in fact, are complex and uncertain. Yet, while some things are being tried, much remains to be done. Still the primary obstacle may be uncertainty about deli’s role.

Just picture the meeting at a big chain. It is suggested that in the proposed new construction, the supermarket should bargain for a drive-through. An objection is raised, as surely as night follows day, with someone saying: “But that would undermine the whole purpose of our deli operation, which is to bring people into the store!”

More often than not, that would be the end of the discussion. An idea is knocked down because of uncertainty as to the real role of the deli department in today’s supermarket.

Well, let me be blunt: I think it is pretty close to suicide for retailers to not view deli departments as entities unto themselves with their own imperatives as to sales and profits. If supermarkets view the deli as some kind of bait to be dangled before the consumer, a lot of bad things happen.

First, that approach isn’t working as it once did. The business environment has become too competitive. Supermarkets, after all, can’t force consumers to walk through a whole store to get some rotisserie chicken. Consumers will go to Boston Market instead. Second, supermarket executives are insincere when they claim the purpose of delis is to draw customers into the store.

What is wanted is what can never be: to send delis into battle while restricting their ability to compete, then, somehow, hope sales and profits won’t be affected. After all, have you ever heard of a grocery department writing a check to the deli every month because the deli has agreed not to set up a separate register? They want deli as a draw but – and it is a big but – only as long as it is perceived to be “free.”

Encouraging a mind set to subjugate deli sales and profits to the idea of the deli as a draw for the rest of the store leads to bad decisions. Delis are put in stores where they are not justified and can’t be properly managed, not because deli management wanted that location but because the store needed a deli. Then everyone feigns shock that the deli doesn’t make money.

So what is the correct approach? It will vary but, for the most part, the course is clear: Vigorous, customer-driven, deli/retail foodservice operations.

For delis to win out, not only in the HMR battle, but in the general battle for consumer food dollars, the deli needs clear marching orders to capture the hearts and minds – and dollars! – of consumers. It needs the flexibility and autonomy necessary to execute a vision designed to meet and exceed consumer desires.

This magazine is here to help. Today, with the launch of DELIBUSINESS, the deli/retail foodservice industry has its own magazine, designed to focus on the perils and promise of running a deli/retail foodservice operation. A magazine that believes the deli is not just a subsidiary part of some greater entity, but a complex operation that requires respect.

This magazine will help build better delis and a stronger industry. It will point out the best in marketing, management, merchandising and procurement. Its pages will be filled with items both thought-provoking and, at times, controversial. No matter what the question, though, every issue will be infused with the notion that delis matter. This venture is dedicated to the proposition that the deli/retail foodservice industry has come of age and that participants have earned the right to respect. A magazine of this industry’s own is a way of paying that kind of respect.  DB