Execution is everything: This adage holds particular weight in the grocery deli area, where execution is based on products, service and experience.
Poor execution in the deli section, with its complex assortment of fresh and service-heavy hot and cold offerings, can make or break the shopping experience, and erode the high margins the category enjoys — margins of nearly 45 percent for the service deli, according to the Food Marketing Institute.
Prepared chicken is the top-selling deli item, accounting for 28.5 percent of U.S. deli prepared food dollar sales, according to Nielsen Perishables Group. Purveyor Tyson Foods commissioned extensive research to determine the consequences of failure in the grocery deli arena. Research for this article — the second in a series of three — includes findings from two Tyson research projects, as well as Progressive Grocer proprietary research of grocery deli managers.
Tyson commissioned a December 2014 survey of more than 3,000 consumers who have purchased chicken products (rotisserie chicken, fried chicken, chicken wings, chicken tenders), as well as an in-store observation study of 1,373 supermarkets across 36 retail banners.
More than 40 percent of respondents who have purchased chicken products in the past three months reported problems, which were identified as related to staffing, product and the general deli. Not only are lost sales at stake, but the total shopping experience can also suffer, results indicate.
“Consider another business in which 41 percent of users experience a failure in three months of usage: In what business would that not have a negative impact?” asks Eric Le Blanc, VP of marketing, deli and convenience store at Springdale, Ark.-based Tyson Foods. “The study shows that failures in execution result in reduced future visitation, and that’s lost sales. But it also shows erosion in the perceptions of the store’s brand. Retailers work hard to build shopper loyalty so every transaction isn’t about price. Failure to meet shopper expectations in deli works against those efforts. It has an impact on store visits and overall basket ring, not just deli sales. From a dollar perspective, retailers are typically suffering from a headwind of 10 percent to 12 percent sales loss in deli, due to executional challenges. Add the erosion of loyalty and brand equity, and that number, though difficult to quantify, is too large to ignore.”
What’s the Problem?
Deli shoppers identified three types of problems: general deli (long wait time, products weren’t ready, products weren’t available or were difficult to find, and deli wasn’t sanitary); product (product didn’t appear fresh, wasn’t tasty, wasn’t of good quality, was overcooked/dry, was undercooked); and staffing (staff wasn’t knowledgeable, helpful or friendly, or was rude).
PG’s April 2015 issue will delve more into the consequences of general deli and product issues. For this issue, the focus is on staffing.
While ranking third in terms of reported problems, staff issues are likely to have the most profound impact on shopper behavior. Staff problems are identified as staff wasn’t friendly (cited by 46.7 percent of respondents), staff was rude (22.2 percent), staff wasn’t helpful (7.3 percent), and lack of staff knowledge (cited by 6.2 percent of respondents).
While some of these issues are reported by fewer than 10 percent of shoppers, the emotional impact of human behavior can have a profoundly positive (“you made my day”) or negative (“she was rude to me”) reaction.
Staffing issues in the deli are more likely than other problems to have a ripple effect on the total shopping experience. Prepared foods offer the greatest degree of convenience and are often a store’s point of differentiation, but data indicate that the overall experience for many shoppers depends on their engagement in the deli area.
Among consumers reporting a staff problem, their level of satisfaction with their prepared food shopping experience was 33.8 percent, compared with an overall shopping experience of 38.5 percent. Shoppers who reported any problem rated their overall shopping experience at 65.1 percent, where 100 would be perfect. Shoppers who didn’t have a problem gave their overall shopping experience a rating of 82.4 percent.
In addition to shopping experience, staffing issues have an impact on prepared food purchase intent, as shoppers reported low percentages of intent across a number of drivers.
Shoppers encountering staffing issues are likely to punish a retailer by not purchasing. Nearly 40 percent (38.5 percent) will stop visiting for a short period of time, 9.4 percent will stop for a long period of time, and 6.8 percent will stop permanently. That 53 percent of “punishers” translates to 21 percent — one out of every five — total shoppers.
In the hypercompetitive world of grocery retail, consumers shop a number of stores. The deli area, which offers an opportunity to showcase fresh, signature offerings, can positively set a retailer apart from the competition by offering products shoppers might not find anywhere else.
Deli shoppers also make purchases elsewhere in the store, as shoppers want to make the most of any store visit. If the deli experience isn’t great, it will drive shoppers to another retailer that offers a better experience, and with that loss from the deli goes a lot of other purchasing power. While 56.6 percent of shoppers who reported a problem with their deli experience remain likely to shop that retailer, those not reporting a problem are far more likely to continue to shop the retailer — 80.9 percent.
Unfortunately, retailers might not know they’re being punished. Of those who experienced a problem during the past three months, 80 percent won’t report the problem. This is contrary to what deli retailers tell PG: “Trust me, they let us know,” and “It’s easy to track in my store, as [shoppers] let us know.” The remaining 20 percent of consumers will report a problem to a store associate. Nearly 90 percent of deli managers said store associates report incidents of shopper dissatisfaction to their supervisor, 76 percent of respondents engage in periodic inspections of products or display cases, and two-thirds reported that supervisors observe random shopper transactions. These problems are largely invisible to corporate-level management.
Measurable strategies, including comment cards, coupons offered to customers, mystery shoppers and shopper surveys, are employed by fewer than half of responding retailers.
Even if addressed by an associate dedicated to delivering the best customer service, problems are most often considered to be one-off situations. Without careful tracking of these encounters, it’s likely that no pattern of failure will emerge, much less make it up the corporate chain. Without measurement, problems can’t be addressed in a strategic manner, and unreported problems could hold the key to a systemic issue for a retailer.
Retailers Acknowledge Staffing Issues
Retailers gave themselves fairly high marks in terms of the quality and taste of offerings, and having friendly associates, with nearly 90 percent of retailers agreeing or strongly agreeing that at all times their store offers good-quality and good-tasting products, and that deli associates demonstrate friendliness with every shopper. But numbers slipped in terms of staffing issues, including nearly 78 percent agreeing that “the wait time for each shopper is always reasonable,” and 64 percent agreeing that “the deli associates in my stores have an appropriate level of product knowledge to answer shopper questions regarding the products we offer.” Similarly, when it came to training, 85 percent of retailers believe they’re providing excellent customer service training, but those numbers continued to dip down to just 60 percent for product knowledge.
Retailers reported a lengthy wish list for improving staff issues, including improving customer service, training and communications. While many consider it a challenge to find engaged and mature employees, many believe it’s up to the store to invest in associates: “More training on product knowledge”; “Train properly to minimize staff turnover”; “More training and retraining of associates.”
Solutions in Store
Retailers’ perceptions are corroborated by Tyson’s in-store observation study of 1,373 supermarkets across 36 retail banners in November–December 2014. The study found no correlation between staffing levels and performance versus demand index. While maintaining quality customer service is clearly important, the evidence doesn’t suggest more staff equals greater sales performance.
Appropriate staffing is key to success in deli retail, but it’s not as much about the number of associates as it is about well-trained, informed employees. These individuals can ensure product preparedness, display, and the critical element of helpful and friendly interaction with customers.
Rather than adding more work hours in the deli, retailers are better served by investing in the training of associates who work in this valuable section of the store. Customer satisfaction will win repeat purchases, and more likely a greater number of customers, as happy customers share their positive experiences. Then again, unhappy customers also share their experiences.
“RETAILERS WORK HARD TO BUILD SHOPPER LOYALTY SO EVERY TRANSACTION ISN’T ABOUT PRICE. FAILURE TO MEET SHOPPER EXPECTATIONS IN DELI WORKS AGAINST THOSE EFFORTS.”
—Eric LeBlanc, Tyson Foods
53% of shoppers who have had a problem in the deli will stop shopping for a period of time.