BOSTON -- Retailers miss golden profit opportunities every day by failing to maximize food service-style sales at their deli counters, said a panel of experts at the recent New England Dairy-Deli-Bakery Association conference here. NEDDA is based in Braintree, Mass.
"It's a sin, a marketing sin, if we watch our consumers go down the street [to a fast-food restaurant] to get more food," said Marvin A. Spira, panelist and executive director of the Eastern Dairy-Deli-Bakery Association, Hasbrouck Heights, N.J., one of the panelists.
Spira told attendees that fast-food restaurant owners "would have their tongues hanging out" for access to the number of customers who shop daily in supermarkets.
"The Boston Chickens, the KFCs, they are all fighting for that buck, but they have to spend millions of dollars to enter the marketplace," while supermarket deli counters are already there, said Spira.
The five panelists all hammered home these same points, if from different angles: the customer eats more food away from home than at home now, supermarket delis already have most of the equipment necessary to prepare food service-style products, and stores do not direct marketing efforts sufficiently to special groups, or do enough of the cross-merchandising critical to increased sales.
But someone has to take the leadership role at retail, to
make sure these things happen, according to Dennis Hedegard of Shaw's Supermarkets, East Bridgewater, Mass.
Hedegard ought to know. He holds the new position of food-service category manager at the chain.
"We didn't invent the food-service category manager title, but it's really the culmination of bringing together a lot of services you already have, to enhance what you already have going," Hedegard said.
"One of the best ways to do this is theater -- getting to see people preparing food," he said.
Rotisserie chicken is the "No. 1 hit" at deli counters, according to Spira.
Greg Lancelot of Tyson Foods, Springdale, Ark., agreed. "The fast-food people did us a favor by spending their millions," he said. "How was your rotisserie business five years ago?
"The beauty of rotisserie is theater. While you might not be able to sell enough chickens to keep it full of chicken, you could add ribs or turkey breast. If it's cold and empty it does nothing."
Rotisserie chicken is not just about chickens, agreed Spira. "When I go into one of the larger supermarkets and see a great deli where someone's buying a chicken and they're not offered a salad or bakery item, I'd like to break my nails on the window," he said. "I want to say 'please offer them something else or send them to the bakery.' "
Other big sellers at the deli include sliced meats, at 33.7% of deli sales; cheese, 12.5%; salads, 11.4%, and pizza, 8.9%, Spira said.
Anderson Smart Store, a test plant for retailing concepts created by Anderson Consulting in Chicago, shows retailers what needs to be done, said Dan Giacoletto, director of marketing with Orval Kent, East Rutherford, N.J.
"It's almost a kiosk in the department offering other things you need," if buying a deli item such as a rotisserie chicken. "It has a refrigerator unit for salads, a section for crusty breads, wines," he said.
"I went out to a restaurant with my family last Saturday night. They asked if we wanted appetizers, wine, salads, dessert," recounted Giacoletto. "Guess what? They got me for $75 a person. You've got to put [the extra items] where I can see to plan a meal."
Meals eaten away from home have steadily increased from 26% in 1960 to 51% in 1995, Spira noted, while supermarket purchases eaten at home have been losing ground from 73% in 1960 to 49% in 1995.
"The scales have just tipped," Spira said. "If we sit back and don't do anything, we're going to get run over."
Since many supermarket delis are as well equipped as small restaurant kitchens, the slack does not represent a lack of capital spending.
Eighty-nine percent of supermarket delis have microwave ovens, 85% have fryers, 83% have regular ovens, 82% have freezers, and 72% have stoves and chicken rotisserie prep ovens, he cited.
"We have to get serious," Spira said. "We need more cross-merchandising. We need to provide easy access and promote whole meals at peak times."
Retailers need to get away from "percentage mentality," added Orval Kent's Giacoletto. "When I go to my banker, he doesn't let me pay him in percentages; he wants dollars. People in delis tell me, 'I need to get 65% on this item.' These are fictitious numbers. Sell more items. Sell potatoes with the chicken, and bread. Then you have an $8.99 ring. The percentages don't count.
Cross-merchandising is the key to more sales, the panelists agreed. But they all also cautioned against departments competing against each other within the store.
"We've so compartmentalized ourselves that we've tied ourselves up," said Hedegard of Shaw's. "We need to change as supermarkets go into combat with food service.
"It's hard to compete in a supermarket with the quick service restaurants," he continued. "We need to provide easy in-and-out."
He advocated sampling as a marketing strategy, but only if it is done correctly. "Nothing will drive the sale of product faster than sampling, but it has to be good quality, well-maintained, not something sitting on a counter for half an hour like cold pizza. That kind of sampling won't work."
Several panelists warned that retailers have yet to make a serious commitment to deli food service in their stores. Frank Corvino, New England region manager for Mauldin, S.C.-based BK Industries, said that trying to expand deli food service without the commitment from top and middle management is a "formula for disaster."