Instore deli retailers find themselves in continual reinvention mode as they work to identify and accommodate a range of trends and evolving customer wants.
Technology, immigration and curiosity continue to shrink the world, making it easier than ever to find global influences and regional favorites at the local supermarket deli. The growing range of outside influences means consumer expectations of the deli department are greater than ever and likely very different from customer to customer. This could make the instore deli a destination for exploration and discovery for some, while others expect the department to be a convenient option for a fresh grab-and-go purchase.
“With so many possible options and customer needs to address, it can be difficult to know where to focus first,” says Eric Richard, education coordinator for the Madison, Wisconsin-based International Dairy Deli Bakery Association (IDDBA). “Today’s consumer wants the full gamut when it comes to shopping.”
Food expenditures still skew generationally toward the Silent Shopper (61%), Baby Boomers (58%), Gen X (55%) and Millennials and Gen Z (53%), according to IDDBA’s 2020 What’s in Store report. The task of zeroing in on the wants and needs of the individual means considering not only the demographic and ethnicity but also the size of the family. To meet these varied needs, deli departments are banking on a combination of familiarity and variety. This might include offering items that were once only available regionally or rotating new prepared food offerings into the store’s everyday menu.
“It’s important to find a way to bring the trends to life in a way that connects with the retailers’ overarching strategy and targets consumers in a way that will keep the trend top of mind when consumers are contemplating what their next meal might be,” says Andrew Quinn, senior brand manager, Hormel Deli Solutions, Hormel Foods, Austin, Minnesota.
Knowing the potential for each deli customer to be searching for something different, delis must drill down to provide the best service for each customer. When it comes to buying prepared foods, IDDBA’s What’s in Store report found a diversified consumer base: U.S. Hispanic (76%), Asian American (70%), African American (69%) and White/Caucasian (59%).
The commonality of a prepared foods purchase might be where the similarity ends. Another potential might be health-conscious consumers who are on the lookout throughout the store for ways to balance their overall health and wellbeing, according to Stephanie Carlson, global marketing manager, meat industry, Corbion, Lenexa, Kansas. As evidence, Carlson cites the continuing rise in packaging claims.
“Compared to five years ago, for example, deli meat product launches with “no added nitrites/nitrates” claims on the label have increased by 145%,” she says. “Reflecting consumer concerns, product launches with claims stating an item has “no antibiotics” are up 118% during that same period.”
In response, deli employees must be aware that one-size-fits-all customer service approach will no longer work. Employees will need product education in order to field questions about everything from allergens and claims to origin of product. While not all deli customers want or need this level of attention, employees should be able to discern who desires customer service and who does not. This includes providing products in a variety of sizes to accommodate everyone from the individual to the family and offering a selection of prepackaged and grab-and-go options in multiple sizes to make it easy for consumers to get in and out of the store quickly.
“Retail stores featuring instore delis will need to be more agile in responding to burgeoning trends in the deli industry to effectively compete on a national or global level,” Carlson says. “Consumers are constantly seeking out new and exciting products, even in more consistent product categories like the deli, which has historically relied on the same basic meats and prepared salads to draw in customers.”
Typical deli offerings do not resonate with the Millennial demographic, the oldest of whom are now in their early 40s. Millennials account for one-fourth of CPG shoppers and make up one-third of CPG spending. Known for being more progressive than previous generations, multicultural Millennials are open to fresh ways of approaching systematic norms, according to a Mintel blog.
Emphasizing Prepared Foods
Prepared foods for the 52 weeks ending 1/2/16 dollar sales were $9,451,905,816. From the 52 weeks ending 12/28/19 dollar sales were $12,685,601,105, creating an increase $3,233,695,289 between 2016 and the end of 2019, according to Nielsen.
Despite having taken blame for the demise of everything from golf to cereal over the last decade, the demographic continues to push the envelope among manufacturers and food retailers with demands to replicate the high-quality eating experiences of a restaurant and insistence on products featuring responsibly sourced ingredients, according to the IDDBA report.
“Unique and differentiated flavor offerings continue to become more relevant as future generations gain purchasing power, and we need to embrace the shift,” Quinn says. “Millennials look to travel through their food choices and while not all retailers offer a diverse assortment of cuisine types, retailers need to adapt to meet the needs of these shoppers.”
Before and Beyond the Purchase
Desire for personalization and differentiation also include acknowledging ongoing demands for transparency within the food chain among younger consumers. To address this, some retailers are exploring how blockchain technology could improve traceability initiatives within the grocery store. GS1 US, headquartered in Ewing, New Jersey, offers GS1 product identifiers in barcodes that can capture data as it’s being transported or purchased. The not-for-profit organization is also working with a cross-industry blockchain discussion group to develop new standards and create a common language to be filtered through blockchain technology.
“The consumer is absolutely driving more transparency in the supply chain,” says Kevin Otto, senior director of community engagement, blockchain GS1 US. “While consumers used to buy products based on availability and price, studies have shown they now prioritize the availability of information and will abandon brands or retailers that are not perceived to be transparent. Brands and retailers have to put in the work to earn the loyalty of conscientious shoppers.”
Use of blockchain could allow participants to share standardized information in real-time, eliminating silos and speeding up reaction time to changes in the marketplace. This includes the potential to improve the speed of traceability initiatives, provide information about a manufacturer or processor or measure the temperature of food as it’s transported from one location to another. The mingling of dairy, meat, produce and other products in the deli area mean there will be some challenges when it comes to implementing a traceability initiative. Otto recommends retailers look to prior examples where there were disruptions because of visibility issues in each category.
“Transparency is important to ensure the consumer knows where the product comes from and where it’s produced,” Richard says. “By tracking the whole chain to how it ends up in their store, consumers will know where their food comes from. Retailers are beginning to acknowledge this by telling the story behind the products they sell. In full potential, it could change the way consumers view their food.”
Providing the Tools
For deli retailers this increasingly involves showing consumers how to make the most of their time and money resources and still enjoy a range of great food. While the desire to save time and money is universal across all generations, financial vigilance is especially prevalent among Millennials who cite finances as an ongoing major stressor. In response, the demographic is forging a new path; forgoing restaurant expenditures, dedicating weekend hours to Meal Prep Sundays and spending more food dollars on in-home cooking and entertaining.
To capture the attention of these nontypical deli consumers, a growing number of stores are introducing in-house charcuterie programs. Grocery chains like Giant Eagle stores in Pittsburgh, Pennsylvania, accommodate savings and entertaining trends with an in-house BYOB (bring your own board) charcuterie program. Customers bring in their own charcuterie board for filling at a flat price. With meats and cheeses chosen, customers then round out the board’s offerings with cross-merchandised options of olives, pickles, dried fruit and local honey from the deli.
While in the department, IDDBA recommends capitalizing on consumer curiosity with education about products sold in the deli. This could include topics such as enzymes in cheese, good vs. bad fats, protein and probiotics, the use of protein to stabilize blood sugar levels, how healthy fats in meat and cheese can be a part of a variety of diets (low-carb, keto, gluten-free), satiety, and options for heart healthy, plant-based and lactose-free dietary goals. In this win-win proposition, delis can accommodate the trends consumers are interested in while prioritizing service and education for those who seek a more personalized shopping experience.
“The lines are blurring, and as people want to learn more about different foods it provides an opportunity to gather around a focal point where food and sharing food are important,” Richard concludes.