April/May, 2011

From the Editor

Building A Bridge Between Retail And Restaurants

The meat, produce and bakery departments have certainly changed since they were first added to old grocery stores to form the modern supermarket. Their change has been incremental over the years — fresh-cuts expanding produce, value-added meat products proliferating and breads becoming crusty as tastes have evolved.

In the deli department, though, the change has been not of degree but of kind, as a department that once sold only sliced meats, cheeses and smoked fish is now more than 50 percent prepared foods.

This insight and much else can be discerned from this year’s 25th anniversary edition of What’s In Store, the indispensable annual compendium published by the International Dairy Deli Bakery Association (IDDBA).

The volume also points out how this transformation of supermarket delis into a foodservice vendor within the store has repositioned the purpose of the department, making it the bridge between retail and restaurants. Bridges, of course, take traffic two ways.

For the past several years, as consumers have felt greater economic pressure, the deli has been a portal back to the supermarket. Consumers who didn’t know how to cook, hadn’t time to cook or lost the habit of cooking could cut the budget and still feed their families well by moving meals from restaurants to the deli.

Of course, should happy days be here again, one can imagine some shoppers cooking less and using the deli as a bridge on their way out to restaurants as their own cooking and eating habits change.

Indeed, the great question for executives who run supermarket deli/foodservice operations is this: Have we done enough to retain those customers who come to us now for reasons of economy but who, as the economy improves, will switch motivations from those of economy to those of quality, flavor, convenience etc.?

It’s difficult to know. What’s In Store points out how deli salads can sate consumer desires for bold flavors and healthy eating. It notes the rotisserie offers delicious and flexible foods that can be eaten as is or used for sandwiches, salads, soups and more in the ensuing days.

There seems little doubt the best delis offer something very special, an offering that can compete with restaurants.

Although many supermarkets have delis, only a few are top-line operations with extensive foodservice such as wok stations, Mexican food bars, sushi bars, soup stations and display cases of mouthwatering prepared foods. Many others sell sliced meats and cheeses at the service counter and a few packaged salads and items such as hummus in a refrigerated case. Perhaps around holidays, the stores may merchandise some crudité platters or a few containers of holiday foods. Many stores do have a rotisserie, but many don’t go beyond chicken.

Retail branding typically doesn’t distinguish between different offerings. So whereas one has different expectations when entering a full-service Marriott than when entering Marriott’s Fairfield Inn, consumers mostly judge a supermarket banner based on their limited experience with neighborhood stores.

In the What’s In Store publication announcement, IDDBA pointed out the National Restaurant Association’s chef survey, What’s Hot in 2010, noting local product sourcing was a hot trend. The chefs associated these local foods with a “freshness halo” — consumers think the product is fresher, tastier and more nutritious.

Theoretically, supermarket delis could leverage the buy-local efforts done in produce and meat to bring this halo to the deli. In reality, many delis are tied in to promotional agreements with national meat and cheese vendors, and they haven’t even tried to change the sourcing pattern for vendors who supply prepared foods.

So most supermarket deli departments are doing precious little to capitalize on consumer interest in local; the menus really haven’t been altered much to tie in with First Lady Michelle Obama’s Let’s Move! campaign. Precious little has been done to retain the restaurant shopper who traded down during the recession by frequenting restaurants less and the deli more.

What’s In Store explains that consumers, though loosening the purse strings a little, are still focused on value. That is good news for supermarket delis and will probably keep sales stable this year. But the book also holds a warning: The percentage of consumers who say they are buying less in the deli department has grown substantially, from 23 percent in 2004 to 34 percent now. That is not good news.

We need some innovative thinking. Perhaps smaller stores could have a “prepared foods express” version of the big offerings at large and high-traffic stores. Perhaps an upscale brand of prepared foods should be introduced so consumers have a way to upgrade while staying in the store. Perhaps deli directors need a picture of a bridge in their offices, a reminder the department can bring consumers into the store or let them leave for more exciting restaurants. Sometimes all it takes is conscious attention to a problem.      DB