April/May, 2004

From the Editor

Trade Branding

Last issue, the cover story of Deli Business was a terrific review of the findings of a proprietary consumer study on the effects of branding in the deli department. The study, conducted on behalf of Deli Business by Olson Communications, a market research firm headquartered in Chicago, was completely dedicated to researching consumer attitudes toward branding. And, indeed, few things could help the deli industry more than to become more consumer-focused.

Yet what the study really demonstrated was the extraordinary importance of trade branding in the deli field.

Perhaps the most important finding of the study was that even when consumers were well aware of consumer brands in the deli — indeed, even when they asked for product by brand name — they were generally prepared to accept another brand or a store brand. This is crucial. For a brand to have real power, it needs not only to have consumer awareness but also consumer loyalty. And the lack of this loyalty is the story of the research results.

Although this study was the first to demonstrate this finding in the deli arena, similar results have been found in other perishable departments, including produce. The reason is not particularly obscure.

In the center of the store, products are almost always merchandised in some kind of sealed packages — cans, bottles, jars, cartons, etc. Packaging always eliminates the possibility of the consumer tasting the contents and most often prevents consumers from even seeing the contents. In other words, packaging turns the food-buying experience into a leap of faith.

Packaging creates a situation conducive to brand-building. After all, if you like clam chowder with lots of clams and not too many potatoes, virtually the only way to make sure you are getting what you want is to buy the brand of soup you prefer. If the store doesn’t have it, buying another brand would be a real gamble, so most shoppers hold off until the item is back in stock. If shoppers like that brand enough and want clam chowder bad enough, they might shift stores.

But in the deli, no such leap of faith is required. If a consumer likes roast beef, the consumer can ask to see the roast beef. Most stores will slice a taste for the consumer as well. Here we see the limits of consumer branding in the deli.

The consumer may be conditioned to think highly of a brand, or even be conditioned to prefer a brand, but if the store doesn’t have that brand and offers a comparable product, it is a relatively easy task for a deli manager or even a well-trained clerk to let a consumer know that the store actually has something better. Then show the product, give the consumer a taste and, in all likelihood, the sale is saved.

The implication of all this is that, though in packaged goods the power resides with the manufacturers who can convince consumers through brand advertising that they should only put their trust in Hellmann’s mayonnaise or Campbell’s Soup, in the deli department the power resides with the retail deli buying team, which serves as a gatekeeper blocking most firms from ever accessing the consumer.

This suggests two important points, one each for producers and retailers. For producers, it means that whatever efforts one’s organization is going to make to build brand recognition among consumers, it is a terrible mistake to neglect the trade.

Whatever consumer efforts are made need to be carefully coordinated with the trade to ensure product availability at retail and prevent deli managers from suggesting alternatives that negate even the most effective consumer brand-building efforts.

For retailers, the importance of the chain buyer carries with it awesome responsibilities.

To the industry it means that great products and companies can be destroyed at the whim of a gatekeeper. This makes it incumbent on every buyer to treat vendors with respect and to thoroughly and conscientiously consider one’s actions and their implications before acting.

For executives in the chain, it means that no chain can count on doing a great job by merely satisfying consumer demand. Indeed, if the negative on consumer branding in deli is that consumers are open to brand substitution, the positive for the retailer is that consumers are open to suggestions by the retailer. Delis should be filled with many products and brands that consumers don’t know about. Maybe it’s a great domestic specialty cheese that only a few people know about, or maybe it is a signature salad or a brand of meat that is not very broad but excellent in one category.

And for consumers, it means that each buyer, each retailer, indeed the industry as a whole, will have failed if we don’t take our responsibility as a gatekeeper seriously.

Wal-Mart is famous for conceiving of itself as a “buying agent” for the consumer — thus its focus on driving costs out of the system. In planning a menu, every chef thinks of himself as a selector hired by the consumer to find things tasty and fresh.

Sharon Olson, president of Olson Communications, took the myriad of data in the consumer study and saw amidst the noise the truth: That the deli is profoundly different than the grocery department and that the power in the deli, and the potential for growing deli sales, lies with the trade. It all happens for consumers, but it happens in the trade.  DB