KANSAS CITY, MO. - As the dust settles and the initial shock of the coronavirus (COVID-19) wears off, with businesses finding their footing and learning to navigate the waters in a post-pandemic world, it’s time for the instore deli to do the same. Before COVID-19 hit, deli-prepared foods were highly sought after by the dinner time consumer.
In fact, in 2019 deli-prepared entrees was the highest grossing category in the $12.6 billion-plus deli-prepared foods category. Total, deli-prepared entrees brought in over $4.08 billion last year. In 2019, deli-prepared meats were performing 12.2% better than the year prior, combo meals performed 6.3% higher and appetizer sales increased by 4.2%. The deli-prepared foods category was the supermarket’s biggest selling category.
And then COVID-19 hit.
According to data from 210 Analytics and IRI, total convenient meals (random and fixed weight) fell by .9% during March 2020 compared to March 2019, which fell to 27% during April and down approximately 18.4% during the month of May.
Grab-and-go meals performed better than most deli-prepared categories, with an 18.4% bump over 2019 in the month of March that fell to 6.4% below 2019 sales in April and was back up to approximately 1.9% over 2019 sales during the month of May. Meanwhile, entrees fell as much as 40.4%, appetizers fell as much as 38.9% and sides as much as 29.2% below 2019 sales.
The last couple of months for deli-prepared has admittedly been grim, but Eric Richard, industry relations coordinator for the Madison-Wis.-based International Dairy Deli Bakery Association (IDDBA), sees no reason to believe that the category won’t return to its former glory.
“Prepared foods was one of those sectors that was doing really well before the pandemic hit,” Richard said. “There’s no reason to think it can’t get back to where it was, it’s just unknown when exactly that might happen. Right now with the restaurants reopening their dining rooms — albeit in a limited capacity — it could be time for retailers, especially those that have robust deli-prepared programs, to see if they’re able to reopen and function at a greater capacity than they have been over the last few months.”
Until society reaches a place where it’s time for a full reopen, however, retailers are going to have to recalibrate the practices in the deli-prepared section to best reach consumers and remind them about the easy meal solutions they can access in the instore deli.
A plan for the interim
A few months into the pandemic, it’s still difficult to gauge exactly what COVID-19-caused trends and consumer behaviors are around to stay and which trends will regress back to pre-pandemic tendencies.
Before COVID-19 hit it was typical for retailers to have buffet-like cold and hot bars centered in the deli where customers could serve themselves. Since the onset of the pandemic, however, grocers have shut down self-serve stations, and even though stay-at-home orders are lifting, it’s unclear how long it will take for those areas to reopen — there’s even a chance self-serve may not come back. It’s most likely going to take some time before consumers are going to be comfortable using self-serve-like areas with surfaces other customers are frequently touching.
The challenge is that hot and cold bars aren’t easy to remove, and they take up a lot of space (that could be repurposed for something else) to sit empty. That’s why one of Milwaukee, Wis.-based Hatco Corp.’s retail customers was considering ripping out their entire section of hot and cold self-serve bars and replacing them with hot and cold shelves for grab-and-go options, a permanent change that was going to cost the grocer millions of dollars.
So instead, Hatco’s key sales account manager Ryan Catarozoli and his team came up with a solution that solves the problem of now-unusable space without having to completely transform the prepared foods section or break the bank: well covers.
“To remove hot and cold bars is extreme,” Catarozoli said. “That’s why I like an interim solution like a well cover because it gives the option to figure out what the next thing actually is.”
Instead of removing hot and cold bars entirely, grocers can use well covers that go over the vessels and make the entire bar a flat-topped shelf that can then be used as a heated or cold shelf based on the kind of well that existed before. So instead of ingredients in various wells for customers to make their own salad, for example, pre-packaged salads can now sit on a cooled shelf, and the same is true for meal options in the hot bar.
“Customers can just grab and go and they know no one has touched it, it’s not been exposed to open air and they’re not using the same utensil to serve it,” Catarozoli said.
The well covers are easy to install and they don’t have to be fused, bolted or even screwed on to work, so in the future if self-serve bars come back in style they can be quickly removed and the wells can be filled for self-serve as they were before. It will also be simple for grocers to do a mixed-use version of self-serve and grab-and-go with the bars. For example, the covers could be removed for prime mealtimes, and then transformed to a hot or cold shelf for grab-and-go meal items during off times.
Merchandising: Presentation, freshness and purchase options
In the midst of COVID-19, presentation is everything when it comes to selling consumers on picking up something for dinner that night as they wheel their cart past the deli department, explained Catarozoli.
Instead of going up to the deli counter and interacting with an employee to order an entrée or sides for a meal, many consumers are going to be more comfortable grabbing something that’s already pre-packaged and ready to go.
Since the onset of COVID-19, shoppers have become far more mission-driven than they were before. Consumers know what they need to pick up from the store, and they’re more likely to make a grocery list and stick to it to get in and out. That’s a real disadvantage for deli-prepared meals, because many consumers may not be apt to put down a one-night dinner entree on their list.
That’s why Catarozoli said it’s important to find ways to make deli-prepared foods pop.
“If you can figure out a way to make the food look as pleasing as possible so that customers are like, ‘wow, that looks amazing, it looks hot, it looks fresh, it looks like it was just prepared, I can see the people behind the counter in a safe area wearing gloves and masks and preparing the food,” he said.
Hatco offers merchandisers such as hot and cold shelves, cabinets and air curtains that can help grab-and-go items stand out. The packaging is also going to be key, Catarozoli pointed out, and clear packaging that lets the customer clearly see the food they’re taking home is going to be the best way to go.
IDDBA’s Richard said that if deli-prepared foods are properly marketed and promoted, consumers will view the deli as a meal destination just as a restaurant would be.
Pandemic or no pandemic, consumers are still busy, and an already prepared meal to take home and sit on the table after a long shopping trip is still appealing. Shoppers just need to be reminded that it’s still an option.
Consumer dinnertime desires haven’t really changed too much either, Richard said, although there has been an increase of comfort food sales. What it really comes down to is the way the consumer acquires the food, whether it’s through visible and eye-catching shelving in the store or through offering online ordering, pickup and delivery.
Richard suggested that retailers market deli prepared foods not just in the store, but online too. The more a retailer can offer meal options that shoppers can customize, and order online and then pick up in store, the better.
“It comes down to letting consumers know, hey this is an option and we made it easy for you to get this by placing your order online and just picking it up while you are already in the store for your weekly stock-up trip,” he said.
This story is from the July 2020 issue of Supermarket Perimeter. To view the full magazine, click here.