Fresh Deli Trends: Delis Seal the Deal

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Fresh Deli Trends: Delis Seal the Deal

In the immediate days leading up to IDDBA’s annual confab poised to get underway this weekend in Houston, I’m pleased to present a preview of our hot-off-the-presses findings of Progressive Grocer’s 2010 Deli and Bakery Operations Reviews, which annually provide a real-time snapshot of what’s cooking in supermarket bakery and deli departments.

Unlike other category-specific surveys in the marketplace, our exclusive, retailer-driven “annual state of the deli and bakery” reports are a hallmark of our brand’s heritage of providing reliable, real-time industry intelligence.

As the key providers of quick and easy main meal components and right-on-time adjacency products, the deli and bakery departments have been among the hottest tickets in supermarkets these days, as evidenced first by results of our 2010 Deli Operations Review, which found more than half (52 percent) of retail deli executives reporting higher sales in the 12-month period ended March 31, 2010 — good for a 3.5 percent net change vs. with last year’s 40 percent tally reporting increases.

While the previous year’s sales were up for more than half of the respondents, 65 percent projected even stronger sales performance for 2010 in total — a far cry from last year’s cautious 31 percent outlook. What’s more, another 29 percent of retail deli executives expect to continue seeing stable gains for the next nine months, indicative that many retail deli operations have finally hit their stride — and have perhaps at last acquired the necessary know-how and confidence — to better compete head-on with foodservice competitors, thanks to higher-quality fare, variety and operational proficiencies.

Carefully compiled from the collective input of deli and bakery executives from around the country, our annual survey covers the critical issues on the minds of the average supermarket deli executive on a daily basis, including same-store sales performance, leading departmental challenges, labor considerations and fastest-selling items.

All told, the average grocery deli official anticipates a 5 percent same-store departmental sales gain between now and year’s end. About 65 percent expect to see an increase, which handily rivals the 6 percent who believe their deli sales will slide in the next three quarters.

If the stronger reputation supermarket deli departments have steadily commanded in the past 15 to18 months is any indication, it seems comparatively clear that for laggards, increased in-store deli business is theirs to lose in light of the many grocers that are effectively positioning their deli offerings as true solutions that fit consumer lifestyles.

In terms of the key methods deli executives find to be most effective when enhancing the value proposition of the in-store deli department, the familiar supermarket standbys — ads, signage and price points — topped the leader board.

Meal bundles, electronic signs, “sandwich boards” in the store entrance, and “outstanding customer service” were also found to be successful drivers of the value message. As one deli director noted, “We are encouraging bundled meals in our prepared food section in new ways, and are now actually doing steaks to go off the broiler/grill,” while others described efforts to “make the appearance of our deli departments as fresh as possible,” as playing a key role in driving deli department performance.

“We continue to add more gourmet prepared foods, along with a greater gourmet/imported cheese selection,” said another deli official, while rolling out more new products, coupled with “more associate training and seeking out higher quality products,” was a common theme with several others. “Adding more specials and different types of sandwiches,” was also deemed very important for another panelist.

Among the other enlightening comments deli directors reported in the survey pertaining to the value proposition equation, several said they’re aggressively working to alter price perceptions by offering more in-store specials, more value-added products, lower on-ad retails with whole-dollar price points (i.e., $10 instead of $9.99), and even value-priced meal deals for $2. “We are promoting and selling more value-priced products to give people a choice,” said one deli study panelist, alongside comments from yet another, whose stores have been concentrating on offering smaller portions and more value-added, convenient, time-saving items.

“We are changing our product mix to carry less expensive items that our customers are looking for, such as $2.99-per-pound products vs. only a $6.99-per-pound line,” noted one more deli study respondent, while others discussed major undertakings to “update our entire Web site to promote our party trays/catering. We are focusing on our meals business, because we’re seeing more families using our deli more often.”

Employee training was also cited as being critical to the value equation of the in-store deli among many deli executives, one of whom noted: “We are devising new display methods, and concentrating on associate training and certification have been active on our radar screens.”

Emphasis on training customer service teams, in tandem with marketing value-priced and unique items, will remain a top priority of a sizable percentage of participants, one of whom said he’s intent on “bragging more about our freshness and quality principles as well.”