Facing Deli Consequences

From long wait times to out-of-stocks, Tyson Foods research reveals that many issues common to grocery retail are magnified in the deli area.

In this, the final installment of Progressive Grocer’s 2015 Deli Insights series, data from two major Tyson Foods research initiatives, “Consequences of Failure” and “In-store Observation,” demonstrate that general deli and product issues can undermine shoppers’ trip missions, but that investing in associate training can solve long-standing problems.

More than 3,000 consumers who purchased or considered making a prepared chicken purchase at grocery retail during the past three months were tapped in December 2014 for Tyson’s “Consequences of Failure” research, which delves into deli issues and the impact they have both in the deli and store-wide. In-store observational studies were carried out in November and December 2014 at more than 1,300 stores across 36 retail banners to shed light on operational and product issues at in-store delis. PG also fielded a proprietary survey of retailers that weighed in on their operations, findings of which are included in this article.

As reported in PG’s March 2015 “Shore Up Valuable Deli Area” article (http://magazine.progressivegrocer.com/t/149254), executional failures disrupt 21 percent of shoppers’ usual trips. Failures in the deli area are defined by general deli issues (long wait times, availability of product, cleanliness and appearance), product issues (overcooked or dry product, as well as appearance and taste of product), and staffing issues (staff knowledge, friendliness, helpful or rude), the latter of which was the focus of the March article.

Some 41 percent of all shoppers surveyed say they had a problem at the in-store deli, with significant issues identified as general deli (42.9 percent of respondents) and product issues (46.7 percent).

Costly Results

Cleanliness is table stakes, with consumers barely registering sanitation as a problem. Retailers indicate they have the processes in place to ensure that it’s not an issue. “Clean cases, no streaks,” says Tony Orlando, owner of Tony O’s Supermarket & Catering, in North Kingsville, Ohio. “It has to be fresh-looking. No dirty spoons, no dishes in the sink. … We have an open kitchen, so people see us. We have to keep it clean.”

Tony O’s deli associates continually scrutinize the area with a consumer’s eye for visual appeal and cleanliness, he says. This is proof that investing in procedures and training pays off.

But there are other issues in need of addressing, including long wait times, product preparation and availability, and product quality. General deli and product issues have a tremendous impact on purchase behavior, with approximately two-thirds of shoppers who didn’t make a purchase indicating that general deli issues and product issues were the reasons.

Time — and Timing — is Everything

Similar to checklane issues retailers are plagued by long wait times at the in-store deli. Nearly a quarter of consumer respondents won’t make a purchase if they feel the lines are too long. Wait times are a chronic problem reported by shoppers and acknowledged by retailers. Pre-ordering capabilities via store apps and kiosks are gaining traction but most retailers continue to rely on staff efficiency. Tony O’s Orlando has mapped out peak traffic times and cross-trained managers to jump in as needed in the deli. “We always have backup,” he says.

Randy Yochum, supervisor of perishables departments at Newport Avenue Market, in Bend, Ore., offsets wait times with appropriate staffing. “When you walk into our deli, you’ll see eight or nine people working,” he notes. “We visit large chains and we’ll see no more than two people working in a deli that’s double the square footage.”

Following closely behind in wait times in general deli issues is the lack of availability of products, either because they’re not ready or not in-store. Orlando says his team is in the deli at 5 a.m. to ensure that by 8 a.m., everything — all items made in-house, from scratch — is ready for business. “The deli manager can’t arrive at 7 a.m. and think it will all come together,” he says. “That means the early-morning customers will be [disappointed].”

The right products at the right time are crucial for success in the deli area; you can’t sell what you don’t have. Nearly three-quarters — 74 percent — of retailer respondents to PG’s deli survey agree that “at all times, the products that our shoppers want are available.” This indicates that 26 percent of the time, products shoppers want aren’t available.

Shoppers say product availability is a top-three reason for where they shop, according to “Solving the Out-of-Stock Problem,” a 2015 report produced by the Trading Partner Alliance of FMI and GMA, yet out-of-stocks remain at 8 percent. Such a problem encompasses lost revenue and, even more relevant to grocery retailers, a damaging dent in shopper experience. In-store research commissioned by Tyson Foods indicates that out-of-stocks are even higher in the deli area, where a run on prepared dinner items, such as rotisserie chicken, leads to out-of-stock rates of 10 percent to 11 percent.

Compounding the problem of in-stocks/product not ready, deli managers indicate they’re selling more prepared foods compared with a year ago. More than 70 percent of respondents to PG’s deli survey indicate they’re selling more prepared foods such as rotisserie chicken, fried chicken and salads, compared with just 2.4 percent who are seeing a volume decrease and fewer than 5 percent who don’t offer prepared foods. For many retailers, their point of differentiation is fresh prepared food, but if not executed properly, it could be the reason that shoppers are going elsewhere. Increasing the amount of prepared foods being sold has the potential to solve part of the problem of meeting shopper demand, but any solid execution will include an exponential gain in training.

“Solving the Out-of-Stock Problem” reports “a disturbing three-strikes-and-you’re-out pattern.” As a result of the first strike, the shopper will substitute another item 70 percent of the time; for the second strike, the shopper will make a substitution, make no purchase or go to another store; and on the third occurrence, 70 percent of shoppers will go to another store.

Facing Failure

Seen in the harsh light of reality, not only do shoppers believe their deli shopping experience could be better, but also their lack of satisfaction in shopping for prepared foods is having a ripple effect on the total shopping experience. Shoppers who report any problem already have diminished levels of satisfaction and demonstrate a lower likelihood of recommending or purchasing products than shoppers who haven’t encountered deli problems. Satisfaction levels sink further when focusing on product and general deli problems, with just one-third (36 percent) of those who reported product problems, and 43 percent of those with general deli issues, saying they’re satisfied with their deli shopping experience.

Product Issues: It’s Complicated

While a bad in-store experience carries consequences, there’s an additional layer of complexity with product issues, as many won’t come to light until after the shopping trip, when consumption occurs.

“The product should be formulated and prepared to make it suitable for the way in which it is used,” says Eric Le Blanc, VP of marketing, deli at Tyson Foods in Springdale Ark. “If the product does not meet the shopper’s expectations when she reheats it, retailers and suppliers need to partner to find ways to deliver a product that does.” While Le Blanc believes that retailer and supplier share a joint responsibility in ensuring the customer has a good experience with the product, it’s up to the manufacturer to properly formulate for cook and hold and it’s up to the retailer to prepare the product according to those procedures.

“The first evidence for believing that the quality issues are present before the consumer takes the product is their behavior at the shelf” says Le Blanc. “Rotisserie chicken has the highest shelf engagement in the deli department. … Nearly every shopper will stop to look at multiple chickens rejecting those that look old burned or dried out.”

Among respondents who considered but didn’t make a purchase, 68 percent attribute their lack of purchase to product issues, including nearly 25 percent who didn’t make a purchase based on appearance; and nearly 60 percent of other issues wouldn’t come to light until the shopper — and, in most instances, their family and/or friends — are eating.

Retailers admit there’s room for improvement with product issues: 80 percent of retailer respondents indicate that “products always appear fresh to shoppers.” And just less than that amount — 79 percent — agree that “products are always prepared (cooked, stored, packaged) in the same manner to ensure quality.”

Retailers admit, and research supports, that procedures for food prep need to be supported with training. “Consistency is probably the main problem,” says Kathy Holtzinger, store manager of Hammer and Wikan, in Petersburg, Alaska. “Many times, I find an employee changing how a product is baked or cooked of. Everyone needs to be doing things the same way so that when the customer comes back, they’ll get the same item the same way every time.”

Responses to the open-ended question “What can your deli department do to improve the effectiveness of delivering excellent products and customer service to your shoppers?” were overwhelmingly tipped toward “better training, improved training and communications, and continuous training.”

Tyson’s findings indicate it’s not even additional bodies that will make the difference in terms of improved product quality, ensuring stock during peak periods or customer engagement. Rather, investing more resources in staff training, including product preparation and hold times, will create significant increases in customer satisfaction and repeat purchases.

“CLEAN CASES, NO STREAKS. IT HAS TO BE FRESH-LOOKING. NO DIRTY SPOONS; NO DISHES IN THE SINK. … WE HAVE AN OPEN KITCHEN, SO PEOPLE SEE US. WE HAVE TO KEEP IT CLEAN.”
— Tony Orland, Tony O’s Supermarket

“EVERYONE NEEDS TO BE DOING THINGS THE SAME WAY COMES BACK, THEY’LL GET THE SAME ITEM THE SAME WAY EVERY TIME.”
— Kathy Holtzinger, Hammer and Wikan