When deli managers want to make their departments stand out from the crowd, they often turn to high-profile brands for help.
"In the deli meat and cheese area, it is critical to find a way to differentiate ourselves from other companies," said Tim Pettygrove, director of deli at O'Malia Food Markets, Carmel, Ind. "Branded products is one way to do it."
"We carry those products because they do differentiate us," said Charlie Bergh, vice president of perishables at Bristol Farms, El Segundo, Calif. "They are high-quality products, a little higher priced, but our customers are discriminating in their tastes and they want higher-quality products -- specialty items that you're not going to find everywhere."
While many supermarkets focus on low-priced, high-volume strategies, a select few independents -- usually smaller, fresh-oriented upscale operators -- are seeking out top quality branded items to build business and establish a reputation.
"Our products tie in more with a quality image," said Liz Little, co-owner of V. Richards market, Brookfield, Wis. "We try to get products that aren't so mainstream or can be found in other traditional markets. We look for things which might have a brand name, but definitely have the connotation of a higher-end product -- something associated more with traditional delis. We also try to bring in new products that are trying to get on their feet a little bit."
"We believe that having specific brands gives us a specific marketing edge, and not just in the meat category," said Tom DeVries, director of food service for D&W Food Centers, Grand Rapids, Mich. "We also believe in aligning strategically to suppliers who desire to have D&W as a source of their products."
D&W, for instance, gets all its turkey and poultry products for the meat and deli departments, and for rotisserie programs, from Hudson Farms. Boar's Head supplies the specialty meats and D&W recently picked Smithfield for their roast beef and ham products.
"Our customers seek out some brands," DeVries said. "I think in the case of the Boar's Head name, the quality level of the products and the marketing around it will make them more of a destination product than a standard line of deli meats."
D&W customers seek out the branded variety more often than low price, no-name brands, he said, even though Boar's Head and others may cost from $1 to $3 more per pound.
"We're not looking to be a low-price leader, and we're not priced way out of line, but with Boar's Head, we're pricing to get a far lower return than we get with other products," he said. "But we feel it's important to our image, and the brand is a substantial destination item for our customers."
In O'Malia's area, Kahn's is a well-respected brand, and the stores carry that firm's branded baked ham and honey ham, Pettygrove says. He recommends a consistent sales strategy to take advantage of brand awareness.
"You stick with a brand and promote it, advertise it, keep it in front of your customers' eyes -- making sure it's consistent. You pick one and stick with it, unless the pricing or quality changes, and you'll do all right."
O'Malia's customers are willing to pay for upscale items, he said, and he likes being in the position of selling a higher-quality item at higher prices, even if it means lower gross sales.
"You don't make as high a gross, but the question is, do you want to sell 500 pounds of ham a week at $5.95 per pound, or 600 pounds at $3.95. It's a no brainer to me. You can't sell enough cheap stuff to ever cover your payroll, and its just taking time away from things you are making money on."
Little of Richards said her store's clientele, too, allow her to pick top quality items. "Our consumers are able and willing to pay more. In our environment, we've found they've come to expect that. If it's too inexpensive, it just can't be good -- that's their theory."
And because V. Richards is a single-store operation up against bigger competitors, it does not want to -- and can't -- compete on price. While a customer base of price resistance-free shoppers may seem ideal, Little says she still must keep the product mix well-tuned, selecting items from different branded lines to further differentiate her selection, choosing from everyone from Boar's Head to Sara Lee.
"One thing we were initially adamant about was that any line we bring in, we must get demo money or product, even before we put it on sale."
She'll bring the product in for demonstration, seeking the opinions of regular customers at the deli counter. At least twice, customer feedback on a tested item moved her to reject products. The items are demonstrated again after they are brought into the store for sale. Sometimes, Richards will change brands simply because consumers seem to tire of certain basic products. For Sunday baked ham with free rolls, a Milwaukee-area tradition in high demand by customers, V. Richards switches among hams whenever a new product with the right quality allows it to alter the program slightly.
At six-unit Bristol Farms -- a chain focusing primarily on perishables stores -- delis do about 22% of store sales, said Bergh.
As destinations for gourmet goods, the stores carry lines such as Tincino Italian specialty dried and cured meats, Boar's Head, and other specialty deli meats.
"We do very well with those products, and they are not inexpensive," he said. "Our customers respond very well to that type of product. Its part of our strategy to have products that are differentiated from other food retailers."
Bristol Farms will occasionally promote the upscale brands, and Bergh said the higher-quality brands are frequently willing to lend a hand with new store openings, as well as demos and promotions. "They all have promo and advertising budgets and all of these companies have the same objective we do: to create new customers and maintain existing customers."
