KANSAS CITY - As deli counters began closing at the start of the pandemic and the deli-prepared category took hits due to limited operations and a new get-in-and-get-out shopper mindset, industry experts quickly began drafting ways to bring the category back to its former glory.
Over the last year two key solutions have moved to the forefront to improve prepared item sales: grab-and-go and online ordering. The shift to grab-and-go has been a fairly simple move for most retailers, but adding online ordering capabilities for prepared foods takes a little more planning and a bit more of an investment. Getting those deli-prepared items online though, is a worthy investment, noted Gauri Munuswamy, senior vice president of sales and product development for Mercato, a San Diego-based grocery ecommerce platform.
“Ten percent of the orders that we see on Mercato include items from the deli,” Munuswamy said. “Having those options available is a great way to get folks ordering larger baskets through being able to see all of the different options and being able to think about what they want to eat for dinner that night.”
Over the last year, Mercato has nearly tripled the number of merchants it serves through the company’s ecommerce platform.
Overcoming the challenges
While many retailers have moved typical grocery items — center-store, produce, meat and bakery items, to name a few — online, specialty items like prepared foods are often the last items included on online ordering platforms. That’s because there is often an extra layer of challenges around adding online ordering capabilities to prepared items.
Munuswamy pointed to two issues Mercato often sees: sometimes a retailer’s prepared items are managed through a different point of sale system than the rest of the retailer’s products, and often, prepared items are constantly changing around a revolving menu.
Mercato can help retailers overcome both of those challenges. The company’s software was originally created for specialty food stores, which fits in well with deli and prepared foods, Munuswamy said. With Mercato’s software, users can manage their items using either their own POS or through the Mercato-created dashboard. Munuswamy suggested a blended approach between grocery and prepared foods.
“Retailers can have their point-of-sale integration run all of their grocery items and then have prepared foods operate in a different way,” she said. “We have a central catalog where a grocer can go into their [online] store and add a new item. They can also put in an expiration date as to when the item is no longer available.”
When Mercato helps a retailer create their online platform, they can also build out ordering capabilities for all deli and prepared foods that a grocery store has offered in the last year. The retailer can then check what’s in stock and out of stock as needed. Retailers can also allow shoppers to customize their orders as much as they want to.
Choosing the best format
Moving into 2021, many retail customers who use Applied Data Corporation’s newly acquired ShopperKit have significant plans to further expand ecommerce offerings, moving into increasing online capabilities for the deli-prepared category, said Steve Paro, the former head of ShopperKit and the newly appointed chief operating officer of ADC.
When is comes to online ordering, the deli-prepared category is following the same storyline that produce did as fresh fruits and vegetables moved online. Retailers worried that shoppers would be reluctant to buy fresh online when they couldn’t see or touch the item before buying it. But what retailers saw instead was that when consumers had a good experience, they kept coming back online for more. Paro expects deli-prepared to experience the same trajectory.
The biggest difference between moving fresh categories like produce online and deli-prepared, Paro pointed out, is a little more planning of logistics.
“It becomes a matter of what level of assortment are we doing?” Paro said. “Are we going to allow customers to just order as if they were at the counter themselves, or do we want to have fixed-weight assortments where everything is prepackaged ahead of time?”
Paro suggested that retailers make report-based logistical solutions. If data shows that demand for a certain item is higher, retailers should consider prepacking items for orders, while less popular items might be better prepared on an as-needed basis to avoid potential waste. ShopperKit’s services can help retailers automate that workflow.
ShopperKit assists retailers with the fulfillment side of online orders. The fulfillment software can differentiate between regular grocery items and service counter-prepared items. The prepared items can be routed into a dedicated workflow for the department workers, so they know which items they need to prepare.
“This allows store associates to be picking up orders in parallel to department workers doing the prep work,” Paro said. “When the department workers have completed that prep work the application triggers a notification so that the person doing the order picking can circle back around and pick up those items. It allows for the workflow to happen naturally.”
Under ADC, ShopperKit will join the software comany’s suite of solutions offered through FreshIQ such as recipe management, label printing, inventory and waste management, food traceability, production planning, and ordering. With the addition of ShopperKit’s eCommerce fulfillment, ADC’s products will deliver streamlined store operations across the entire food lifecycle.
“This is an exciting time in ADC history. The ShopperKit team and platform are helping retailers gain control of their in-store fulfillment strategies, a critical component required to maintain their digital brands,” said Shamus Hines, chief executive officer of ADC. “As a company, we are committed to enhancing all store operations for food retailers. The addition of ShopperKit will give our customers a unified approach to their omnichannel strategy while providing them with visibility into store operations with user-friendly products that help grow sales, cut costs, and improve operational efficiencies.”
Encouraging impulse sales online
A lot of instore deli-prepared sales are driven by impulse purchases. Without a customer being able to walk past the deli department and be lured in by the smell of freshly made foods or the enticing looks of the latest prepared items, retailers may question how to bag those sales when a customer is shopping online.
That’s where visibility and presentation come in handy, noted Munuswamy. Reminding customers that they can answer the ever-present what’s-for-dinner question when they make their online order is key.
“People know you have grocery items, so you have to put your deli-prepared items front and center on the site,” she said. “Make sure that the images are representing what the customer is going to be getting. The image is key to get folks enticed and to get their mouths watering.”
Retailers should also take advantage of social media and remind customers they can order dinner for pickup or delivery with the click of a button. Special online promotions for prepared-items and cross-merchandising suggestions are also helpful techniques in driving online sales.
It can also be effective to push online ads for promotional items as the shopper checks out online. Think of it as the endcap a shopper sees as they get to the checkout line when they shop in-store.
On the order fulfilment side, Paro suggested using communication tools with shoppers to help encourage last-minute purchases.
ShopperKit’s SMS chat platform was initially built to help order pickers communicate with shoppers about item substitutions. The company quickly found that orders in which the item picker communicated with the online shopper saw a 2-3% increase in basket size because it allowed for customers to add on items they forgot at the time of checkout.
“What we’re seeing is that it’s also a really good channel for getting what we like to call impulse-by-proxy purchases,” Paro said. “If you’re having an experience with your shopper, there’s an opportunity where we can send out a message letting the customer know that we have fresh rotisserie chickens in stock, for example, and ask if they’re interested in adding that to their basket.”
“I love the psychology of it all,” Paro noted. “You’ve already been communicating with this shopper, right? So this is a person who is kind of working and acting on your behalf to fulfill your order. When that person reaches out and says, ‘Hey, we’ve got fresh, hot rotisseries, fresh off the rack, would you like one?’ It’s not perceived by most people as you’re trying to sell me something, it’s perceived as you’re just being informative and letting me know.”
Paro said this technique has been extremely effective in helping to get those kinds of items added.
While some retailers have been hesitant to fully embrace deli prepared foods in the online marketplace, Paro noted that it makes good business sense.
“All the retailers are selling the same heads of lettuce, whereas your hot and fresh deli are, A) super high margin and B) they’re your differentiator,” Paro said. “Those items are what really differentiate your assortment from others, so I highly advocate to have all of those options online.”