MADISON, Wis. -- In evaluating their dairy, deli and bakery departments, retailers are underestimating the importance of price in the mind of the consumer -- and overestimating the importance of brands, according to the latest research sponsored by the International Dairy-Deli-Bakery Association.
In twin surveys, the study polled consumers, and then retailers themselves, in an effort to see whether retailers' ideas about what their customers want are on the mark. Especially in deli and dairy, price was shown to be important to consumers, less so in the in-store bakery. But only a small percentage of retailers, less than 10%, thought that price would be a major attention-getter in any of those departments.
Ironically, though they differed on the importance of brands, most retailers and consumers polled agreed that brand awareness will grow in the future.
The research was conducted for IDDBA by Rosita Thomas, president, Thomas Opinion Research, Woodbridge, Va., and presented at IDDBA's 38th annual Dairy-Deli-Bake Expo & Seminars in Orlando, Fla. The study's results are based on a national sample of 949 consumers and 207 retailers across the country, all polled via the Internet, Thomas explained.
When asked what grabs their attention first in the deli, more than a third (36%) of consumer-respondents said price. The same was true in dairy, where 36% also said price -- but in the in-store bakery only 17% said price. Retailers, however, felt price was not that important to consumers. Only 7% deemed it as important in deli and in bakery, and 18% thought price would be a big attention-getter in dairy.
Brands were rated the most important by only 11% of consumers in deli, and brands played almost no role at all in the ISB, researchers said. Conversely, about a quarter of retailers in deli or bakery think consumer brand awareness is "very strong."
The dairy case presents a more extreme gap between what consumers and retailers are thinking. There, when asked what grabbed their attention first, 32% of consumers said brands, but a full 56% of retailers said they believe brands rank first in importance to consumers at the dairy case.
Even though 32% of consumers said they pay attention to brands in the dairy case, many show little brand loyalty. Indeed, when asked what they would do if their dairy was out of their favorite brand, 62% said they'd purchase an alternative brand and 16% said they would buy whatever is on sale.
And, not surprisingly, in deli, where brands were given priority by only 11% of consumers, 28% of respondents answered the query, "What does the brand mean?" with the word "nothing."
"In both the deli and the in-store bakery, consumers said quality and taste were more important than brand. And in all areas, they said having a greater variety of product would cause them to spend more money," Thomas pointed out.
The opinions expressed by shoppers, a third of whom also agree they'll spend more in their supermarket dairy, deli and bakery department next year, should cause retailers to sit up and take note. It definitely presents an opportunity for creating brand identity for the store, Thomas said, "especially when consumers were asked what their supermarket had done in the last year to make itself memorable, and we get an answer like, 'Nothing. I'm still waiting.'
But on the positive side, one mentioned a recipe contest in the bakery and the fact that her bakery had red, white and blue bread on the 4th of July.
"There are opportunities there. We're all patriotic this year," Thomas added.
Another consumer said, "They make a wonderful 7-grain bread that nobody else can match."
As for store brands, there was good news. Three out of four consumer-respondents said they believe they're as good as national brands. And a large percentage of consumers said their brand awareness would increase. A full 81% of deli respondents said their brand awareness would increase; 73% of bakery respondents said it will; and 75% of dairy respondents said it will.
Most of the retailers researchers talked to report having a store-brand program in their department. That included 78% of dairy retailers, 66% of deli retailers and 62% of in-store bakery retailers. Most of those said their program includes premium store brands, and more than 8 in 10 of those retailers surveyed believe premium store brands will constitute a major marketing strategy for supermarkets in the near future.
While the study put a sharp focus on brands, including private label, and on pricing and how both affect the customer's shopping behavior, it also turned up the fact that quality and service are extremely important in the dairy, deli and in-store bakery departments.
In fact, a full 75% of consumers said "product attributes" are what first grab their attention in the bakery.
Given the nature of the bakery, with its increasing variety of bake-off products and a tendency to create some theater in that department, it's not surprising the figure is so high. One consumer said, "I just can't resist the aroma of fresh-baked bread. If it's fresh out of the oven, I'll buy a loaf."
In deli, 48% said product attributes are what grab their attention. In dairy, the figure was 27%. What's more, an overwhelming majority of deli and bakery retailers agree (77% and 89%, respectively) that product attributes are more likely than brand or price to grab consumers' attention first. Whereas in dairy, only 14% of retailers said product attributes would grab the consumer's attention first.
The surveys of consumers and retailers included several open-ended questions, Thomas pointed out.
"We asked deli consumers what can be done, besides reducing price, to get them to spend more in that department, and they most often said they want more variety or selection. You might say, 'Well, there's more variety than there has ever been,' and, really, it's not clear what they mean. That probably deserves more exploration," Thomas said.
"They also want freshness and free samples, and buy-one-get-one-free offers, and a friendlier staff. Some mentioned combination specials, like a special price on sliced cheese when you buy ham, and they want better labeling. Some said they wished they could get a guarantee of quality. They want more information about the product, including how healthy it is," Thomas said.