On The Fast Track
The supermarket deli department has become ground zero for grocers to deliver more authoritative presentations and value-positioned offerings.
Some 40 years after in-store delis became one of the most popular offerings in supermarkets since sliced bread, the department continues to evolve well beyond its cold-cut and cheese roots with an ever-expanding array of prepared foods and unique items that are helping retailers enhance their images and boost the bottom line, as affirmed by the results of Progressive Grocer's 2012 Deli Operations Review.
With increasing numbers of consumers turning to supermarkets to meet their demands for convenient meals and new culinary experiences, in-store delis have become ground zero for grocers to deliver on the promise of more authoritative presentations and value-positioned offerings that stack hearty returns to their bottom lines.
But moving the needle as far as it has come in recent years has been no easy journey for supermarket deli category leaders, the most successful of which have devoted untold resources and planning in recent years to refine and perfect the most feasible programs for their stores. While pricing and store labor remain among the most challenging and integrally important of all related considerations for retail deli operations, the quality and value propositions that are further required to achieve success are considered by many to be a work in progress in the grand scheme of delivering consistent excellence in the fast-paced, shrink-prone deli department.
As revealed in our annual "state of the deli department" survey, 69.4 percent of retail deli executive respondents posted higher sales in the 12-month period ended March 31, 2012,good for a 5.2 percent net change versus last year. Further, slightly fewer panelists — 12.2 percent — reported decreases in this year's study compared with last year, while the remaining 16.3 percent of panelists saw no discernible change in their past year's deli sales.
Fielded to supermarket deli executives in the first quarter of 2012,PG's annual Deli Operations Review survey is aggregated from direct input from a diverse cross-section of supermarket deli executives across the country, who were asked to share benchmark estimates for their average deli department operations, including same-store sales performance, leading departmental challenges and opportunities, retail meal solutions programs and fastest-selling items, among others.
In the realm of departments where retailers can prominently distinguish themselves from competitors and make a strong impression with shoppers, the deli department continues to be one of the fastest-growing areas of the store, both in sales and floor space allocation, as further confirmed by 71.4 percent of survey panelists, who forecast an even rosier same-sales performance when looking ahead to the balance of the year. What's more, just 6.1 percent of this year's survey panelists project decreased same-store sales through the end of the year, two points lower than last year's average, while 20.4 percent of deli executives responding to our survey anticipate that comparative deli sales will remain flat.
Our analysis of this year's Deli Operations Review survey data unfolds on the following pages, as illustrated by the corresponding charts that feature general synopses of the most influential category trends reported by retail survey panelists.