MADISON, WIS. - 2020 was a year of change, albeit unplanned and unwanted. Change in how we interact with each other. Change in how we work. Change in how our children are taught. Change in how consumers shop. And change in how customers eat.
While some of these changes will be temporary (and in some instances, we have already reverted to pre-pandemic behaviors), others will be slower to return to pre-pandemic norms, if at all. According to Upwork, a freelancing platform, 27% of Americans will continue to work remotely in 2021. That’s a sizeable percentage, and one that will continue to impact consumers’ eating and food-shopping habits.
Overall grocery sales in 2020 reflected the move to home offices and limited ventures outside of the household, especially to restaurants. According to Statista, total US grocery sales reached almost $760 billion in 2020, up from $683 billion in 2019. Adding to this increase was the explosive growth of online grocery shopping, which blew past even the most bullish pre-pandemic projections. This channel recorded sales of $95.8 billion in 2020, up 54% from 2019, according to eMarketer.
Although 2020 was a relatively successful year for many sectors of the retail food industry, the pandemic challenged the operations of food retailers and manufacturers alike. In particular, the instore deli department was almost immediately impacted, given its role as a department where face-to-face interaction with consumers commonly occurs. Labor was a big factor, as was the pre-pandemic trend of focusing on entertaining, platters and other larger rings. The deli department had to transform itself in 2020 to adjust to the new way consumers shopped.
Deli sales reflect current consumer eating patterns
Despite the challenges food retailers and manufacturers faced in 2020 (and continue to face in 2021), deli meat and cheese sales were up over the previous year. According to statistics from the International Dairy Deli Bakery Association (IDDBA) and IRI’s Integrated Fresh database, the deli meat category registered total sales of $7.2 billion in 2020, a year-over-year increase of 9.3%.
Sales of deli cheese were $7.6 billion, an almost 16% increase from 2019. While determining the exact cause for this increase is tricky, it most likely can be attributed to the large number of Americans working from home during the pandemic. Remote workers are not only making meals for themselves from their home offices, they’re also preparing food for their children, many of whom have been in a virtual learning environment for almost all of 2020. Deli meats and cheeses are comfort foods, and just like certain types of breads, they are also functional foods.
Factor in a dramatic reduction in the number of away-from-home, prepared meals purchased for these households —due to restaurant closures and restrictions —and the events of 2020 created a scenario where deli meats and cheeses became a more standard component of consumers’ meal planning.
One trend that was already gaining traction prior to the start of the pandemic —and which has grown exponentially since —is pre-sliced and packaged deli meats. This trend reflects the new consumer shopping patterns brought on by the pandemic: many shoppers are eager to conduct their shopping trips quickly and have their deli meat and cheese orders filled with little or no interaction at the deli counter, for either time or safety concerns.
What does the future hold for the category?
While this pandemic has proved difficult to make predictions from month to month —let alone years into the future —we can make general predictions based on what we have observed over the last half of 2020 and into 2021.
- The role of e-commerce. While it most likely will not remain at the same usage levels as during the pandemic, e-commerce options (pick-up or delivery) may continue to be a part of some consumers’ weekly grocery shopping routine. Besides the center-store dry staples, these orders will most likely include products from the instore deli. As the dynamics behind online shopping platforms continue to expand, it has become vital that most, if not all, products currently offered in the physical instore deli department can also be purchased online. Additionally, customization, such as the amount of the product the consumer wants and how thick/thin he or she wants it sliced, are also potential points of differentiations to continue to drive deli traffic online.
- Sampling reimagined. It’s too soon to gauge consumers’ comfort level and shopping habits once instore mask mandates are lifted. Since the pandemic began, instore sampling came to a complete stop. While instore sampling will most likely return, it may come with new safety precautions, such as eliminating self-serve stations and trays; offering individually-wrapped or -packaged samples, for those consumers who remain cautious in taking samples from a community station or tray; or including unsolicited, individually-packaged samples in consumers’ orders, which some retailers and producers have already begun doing.
- A new or hybrid workplace. As mentioned above, a significant percentage of workers have indicated that they will continue to work from home even after the pandemic has ended. In a continuation of eating and meal trends seen during the pandemic, home-prepared lunch and dinner options will undoubtedly remain. This means that telecommuting workers will continue to look to the instore deli for meats, cheeses, sides, and other products that will either serve as their main meal or complement a made-at-home dish. Additionally, deli-prepared is poised to benefit from workers who may work some days at home and others at the office, as they will once again turn to supermarkets for prepared lunch options on those days working away from home.
- The return of deli-prepared. This category experienced one of the greatest declines during 2020. However, recent statistics are painting a much brighter future for this category, which was one of the more promising fresh categories before the pandemic hit. Data figures for March show that deli-prepared sales were up 7.4% compared to March 2020, as well as greater than the 2019 pre-pandemic normal of 3.6%. As society returns to “normal” and consumers begin looking for prepared meal options —not just as a change of pace from home-cooking, but for in-person events and gatherings that are certain to return this year —deli-prepared is well-positioned to again capture its share of away-from-home meal purchases. The pent-up demand for prepared food will be reflected in this category moving forward.
Engaging through entertaining and education
As mentioned above, entertainment will continue to play a big part in drawing consumers to the instore deli. For the past several years, IDDBA has been focused on charcuterie and the impact it can have in helping operators achieve this.
While many consumers turn to the deli for their at-home and in-office meal options (as evident by last year’s sales numbers), they are also looking to instore delis as a source for entertainment food ideas.
For some consumers, a charcuterie board was always something ordered at a restaurant or wine bar. It wasn’t necessarily an experience occurring within the home. But just like all entertainment options over the past year, consumers have brought these formerly away-from-home experiences into their homes. Whether it is creating a charcuterie board to explore with your significant other or a virtual wine-and-cheese pairing with friends, the instore deli will continue to play a role as the supplier of these items needed to create an in-home experience.
Besides the products themselves, education and guidance are key to growing the instore deli program as a true destination for entertaining purposes. Not everyone is knowledgeable about the types of meats to include on a charcuterie board, nor the other items that complement them. Nor is everyone familiar with the tastes and textures of cheeses and the types of beverages that pair well with them. Having a knowledgeable team of department associates can bridge the gap between curiosity and purchasing when it comes to specific deli meats and cheeses. (IDDBA offers Charcuterie Professional Certification: Salumiere, which establishes subject matter expertise in the sale and handling of charcuterie products.)
Having charcuterie experts in the instore deli can help not only in-person shoppers who have questions, they can also play in role in developing and expanding the retailer’s charcuterie program. From deciding the inventory of specialty meats to designing charcuterie board ideas, these experts can bring a wealth of knowledge to both instore and online shoppers, who continue to look to their local supermarket retailers as a source of knowledge and entertainment ideas.
In addition to charcuterie concepts, shoppers will once again be looking to the instore deli as a source of food ideas for events and gatherings. While this was a growing trend previously, it may experience a bigger resurgence as we start to see the pent-up demand of people wanting to host or attend larger gatherings.
As of the writing of this article, there is renewed hope that more vaccinated individuals, the lifting of gathering restrictions, and a more overall sense of comfort will equate into more and larger purchases later this year to celebrate special occasions and holidays with friends, especially as in-person events replace the virtual gatherings that were commonplace last year. Take a proactive approach —both instore and online —in promoting different meal and occasion-planning options to consumers. As in past years, focus on the holidays and seasonal occasions, such as graduation parties.
Many experts are predicting a correction in the grocery sector this year, reverting to pre-pandemic norms. Time will tell when other facets of society will return to normal as well. Regardless of when this will happen, deli remains a bright spot in the grocery sector. While the ways in which consumers have purchased foods may have changed in the past year, the foods they seek out have not. And many of these foods are found in the instore deli.
Eric Richard is industry relations coordinator for the Madison, Wis.-based International Dairy Deli Bakery Association (IDDBA).
