Delis are having their day in the sun with enviable sales, even as the darkening economy spurs consumers to shift the way they're spending money.
Shift is the operative word.
Rather than trading down, customers apparently are taking comfort in the knowledge they're buying something tried and true that helps them stay healthy and gives them comfort.
Well-known brands and good-for-you items are taking center stage, even at higher price points.
People are eating out less often in restaurants, statistics show, but they're not about to compromise on quality or on their quest for healthier fare.
“Consumers are being careful with their spendable dollars, but if it [the product] is healthy, that's a plus,” said Tony Doering, deli manager at Quillin's, LaCrosse, Wis.
“I really believe people want to eat healthier. They just don't always know where or how to find the right products. Part of our job is to educate them.”
Quillin's is doing that as it brings in more lines that are all-natural, and continues to upgrade its sandwich program. This winter, the nine-unit independent added Hormel's new Natural Choice deli meats and, just last month, a Finlandia brand lactose-free Muenster.
“A little earlier, we got Finlandia's lactose-free Swiss, and now the Muenster is doing extremely well. Muenster is very big in this part of the country, probably because of our German and Scandinavian heritage.”
Consumers' health-consciousness has definitely heated up over the past year, even over the last few months, retailers told SN.
“It's a clue when people keep asking about sodium content and preservatives. Organic is getting a focus, too,” Doering said.
Out in the Pacific Northwest, the scenario at Lamb's Thriftway is much the same. In fact, officials there told SN the five-unit chain is selling an amazing amount of Boar's Head's new all-natural, organic line of deli meats. That's at a retail price of $10-plus per a pound for some of the items.
“The buzzwords for some time have been ‘healthy, natural, organic,’ and now those are ringing true in deli,” said Tanney Staffenson, advisor at Lamb's.
“It's just a shift. While some people may be trading down, more meals have moved from restaurants to the home, and that brings us more business,” Staffenson said.
Compared to eating in a restaurant, the premium products in deli are seen as a real value.
“Customers are trading up, and we're probably adding some new customers, too,” Staffenson added. “They're buying premium brands of meat and cheese, and our high-end, scratch salad sales are up, doing very well.”
He added that all chilled, prepared foods are getting good rings.
Staffenson said he's seen the shift accelerate just in the last two or three months.
Other retailers told SN that people are obviously willing to pay more for something they know is good, and is good for them.
“Our ‘Natural Path’ private-label deli meats are doing great,” said Terri Bennis, vice president of perishables operations at eight-unit Kowalski's Markets, St. Paul, Minn.
“The Natural Path line has no hormones and no antibiotics ever and, of course, there are no fillers or preservatives.”
The line retails for about 20% more per pound than regular deli meats in the case.
“But people are asking for Natural Path products by name,” Bennis said.
What's even more impressive is sales of specialty cheese right now, Bennis told SN.
“Some of our locations are seeing sales of specialty cheese — offered at a service counter in most locations — up 30% and 40% over last year. People are looking to treat themselves. I still hear this in our consumer groups. [Kowalski's holds periodic focus groups with a cross-section of its customers.] People say they're more than willing to pay for quality and service.”
That dovetails with a comment from Peter Rose, a partner at consumer research firm Yankelovich Partners, Chapel Hill, N.C.
In a recent Yankelovich study, researchers found that respondents were not willing to compromise on quality or service and, for that matter, that they're often buying themselves a treat.
“Even though they're watching closely what they're spending their money on, consumers want to bring some normalcy to their shopping trip in these turbulent times,” Rose said.
He pointed out that while they say they're trying to stick to necessities, shoppers who see something particularly appealing to them are apt to say, “Well, it's not milk, sugar or eggs, but it gives me comfort.”
A really good sandwich at lunchtime can be a big comfort in the middle of a workday. Retailers know this and are making their premium sandwich programs even more special.
At Quillin's, premium Bistro sandwiches are selling very well, Doering told SN. The Bistro sandwiches, introduced a little over a year ago, are overstuffed gourmet sandwiches on “great” bread that are sold by the pound.
After raising the price recently by nearly $1 a pound to cover higher costs of bread and ingredients, Doering has seen no dip in sales.
“It's still a great value. You get a nice, big, satisfying sandwich for $3.50 or $4,” Doering said. “We [supermarket retailers] need to find different ways to offer value, especially in the face of Wal-Mart. We have to step up to the next level.”
About the same time Doering added Hormel's new all-natural line, Brigido's Markets, North Providence, R.I., added Nature's Premium, a new brand of all-natural meats and cheeses. Now, Brigido's has launched an upscale sandwich program using them.
“We developed eight recipes for gourmet sandwiches, using Nature's Premium,” said Bruce Brigido, vice president of the four-unit independent.
“We've got one on a whole wheat roll with turkey, dried cranberries, curly leaf lettuce and cucumber slices. Another example is California turkey focaccia.”
The line includes four varieties of turkey breast, “and they have a lacy Swiss cheese that's great. I'm not even a Swiss cheese lover, but I think this one is phenomenal,” Brigido said.
He has made space for the gourmet sandwiches by cutting back on footage for the regular everyday variety in the deli's self-service case.
Consultant Terry Roberts, president of Merchandising By Design, Carrollton, Texas, is working with Brigido to upscale the deli's offerings even more.
“Traditionally, supermarket delis have offered three tiers of deli meats and cheeses: high, mid and lower. At Brigido's, we're moving everything up. There will be only two tiers: high and mid-level,” Roberts said.
Roberts has her own idea about why consumers in this troubled economy are willing to buy premium brands and premium-quality products.
“In these tough times, nobody wants to take a risk,” Roberts said. “They don't want to spend money on something they might not like.”
If it's a brand they trust or have heard about, that makes it OK, and better yet if the product falls into the better-for-you category, she said.
“In addition to Brigido's, other retailers I'm working with are introducing more natural cold cuts, like the new Nature's Premium line, which is a great product, and also are using them in their signature sandwiches,” Roberts said. “More and more customers are looking for nitrate-free, antibiotic-free, etc., cold cuts or cold cuts that are all-organic. The trend is moving toward better-for-you selections.”
Some retailers are upgrading their private-label brands.
Rouses Markets, a Thibodeaux, La.-based independent that acquired 21 of A&P's Southern Division stores late last year, is one of these.
“We're upgrading the Rouses-label deli meats, taking anything out that doesn't need to be there,” said Donald Rouse, one of the owners.
“We've cut down on added water and salt. The turkey meat now is all breast, and for the ham, we're using a better-quality muscle.”
The now 37-unit Rouses also began offering Boar's Head deli meats and cheeses and condiments a year and a half ago, and is considering offering Boar's Head products exclusively in its delis at selected locations, Rouse said.
“We like Rouses' brand, too, though,” said Rouse. “More likely we could have a deli in the future that has exclusively Rouses' brand and Boar's Head.”
Deli selections that are exclusively Boar's Head are working at some retailers' locations. Publix Super Markets, Lakeland, Fla., has long featured Boar's Head meats and cheeses in its delis, along with its private-label products and other brands. Recently, however, the chain — at selected locations — has converted its delis into Boar's Head delis, offering the Boar's Head brand exclusively.
“We have a couple of Boar's Head Marquise stores, which means we only offer Boar's Head products in the deli. This is less than a handful [of Publix stores],” said Publix spokeswoman Maria Brous.
“Typically, our delis offer Boar's Head products, as well as Publix private label and a few selections of others, such as Land O'Lakes cheeses. We believe in offering our customers selection and quality.”
An Atlanta-based consultant who works with supermarkets, manufacturers and foodservice told SN the Publix Boar's Head Marquise stores are definitely standouts.
“When you walk into the area, you easily know you're in a Boar's Head store within a store,” said Ira Blumenthal, president, Co-Opportunities, Atlanta, a consulting and marketing company. “The marquee, the decor package, the wall treatments brand the area as the Boar's Head deli,” Blumenthal told SN.
“We live in a branded world. I believe price is secondary, packaging is secondary, positioning is secondary, and branding is primary.”
National brands are big, but Brous at Publix stressed that Publix's private-label brand is still very popular in the chain's delis.
“Overall, in these tough economic times, we continue to add value. We offer customers private-label products that meet or exceed the national brands at a 10% to 30% savings.”
Another chain, Salisbury, N.C.-based Food Lion, with more than 1,200 stores across the Southeast, is at work adding items that have a healthier profile and, at the same time, provide a value for its customers, spokeswoman Karen Peterson told SN.
“For example, we recently added a low-sodium turkey under the Sara Lee brand that has performed very well, and we are considering other low-sodium items.” Peterson said.
Retailers also told SN they're revving up efforts to create more in-store items — for instance, prepared foods and store-made salads — that meet “healthy” criteria.
Brigido's, for example, has just begun roasting turkey breasts in-store.
“These are doing very well, as customers love the freshness of the flavors and the fresh-roasted characteristics,” said Terry Roberts. “They view it as much fresher and healthier than any cold cut brand.”
Meanwhile, Staffenson at Lamb's Thriftway said customers love Lamb's store-made items, especially its very popular high-end salads like penne pasta with sun-dried tomatoes and Parmesan cheese.
In fact, Lamb's whole line-up of from-scratch, high-end salads keeps up a steady sales pace, Staffenson said, even as Boar's Head and Tillamook make the registers ring.
“I'm not sure that I'd say brand is that important in the deli,” Staffenson said.
“What's more important is that customers have confidence in you and your deli, that they can count on you to provide quality and that your associates can answer their questions about products and their ingredients. There's no doubt that consumers are more demanding, more concerned than ever. We [retailers] have to respond to that.”