Signs on the economic horizon look grim for many shoppers — the costs of gasoline and home heating have continued to rise this winter, unemployment is creeping back up in many parts of the country, inflation is at its highest point in 17 years, and many economists are forecasting a recession.
Yet for supermarket prepared-food departments, these challenges may present a rare opportunity. Many chains have spent the past several years focusing on consistency and quality in an effort to compete with restaurants. And, when times become tight, consumer demand for convenience won't vanish overnight. Shoppers will be taking a new look at the take-home options available at their local supermarket, which many already view as more convenient and less expensive than their local restaurants.
“When IDDBA recently surveyed deli food-service customers, they said that convenience and value were two of the noted advantages of visiting the supermarket delis over restaurants,” said Mary Kay O'Connor, director of education for the International Dairy Deli Bakery Association, Madison, Wis. “IDDBA's study found that 76% of consumers say that supermarket delis offer better [less expensive] pricing than restaurants; 71% say that delis are more convenient to visit than restaurants; 54% say delis win out with regard to healthier options; and 53% say delis have ‘fresh food/ingredients.’”
In many ways, this climate offers retailers a second chance to make a first impression with a lot of their shoppers. As a result, this year could be a good time to highlight the quality and variety of a store's prepared-food selection, whether that's through a new focus on merchandising or advertising, or, at the other end of the spectrum, a department expansion or remodel.
WAITERS FOR WAITERS
The No. 1 customer complaint in delis and prepared-food areas is waiting time, according to Howard Solganik, partner with Culinary Resources, Dayton, Ohio. There are a number of different ways that retailers can make these areas more convenient, from offering dedicated checkout stations to installing electronic ordering kiosks that allow customers to shop the store while waiting for their deli order.
Solganik, however, suggests another simple way retailers can enhance service.
“My suggestion is to put the equivalent of a server — a waiter or waitress — out in front of the service case to actually write down the deli order, similar to what an [electronic ordering] kiosk would do,” he said. “It's more personal, and it gives you an opportunity to up-sell or sell additional items. Sure, it's more labor, but it's less expensive and easier to implement than a computer kiosk system, and it alleviates one of the top service complaints in the store. If nothing else, it's worth an experiment.”
Although many new display cases can be opened from the front, which could also allow these employees to assist customers directly, or even to restock displays, Solganik noted that this employee's focus should be on selling and suggesting food.
“Grocers are obsessed with trying to find busywork for people to do, rather than having them selling, which I find counterproductive,” he said.
Of course, another way to cut down on wait times is to offer shoppers more self-serve or grab-and-go options. One major trend, exemplified by leading-edge chains such as Whole Foods, is the separation of self-serve areas into stations where shoppers can explore different specialties and ethnic cuisines.
“Store perimeters are really changing, with the expanded square footage with these stations,” noted Wade Hanson, a consultant with Technomic, a Chicago-based food-service research consultancy.
But it's not just the station equipment or the store design that make these departments so appealing, he noted. It's also the customer-employee interaction that these designs encourage.
“It's a combination of the two,” Hanson said. “Whole Foods has done a nice job setting up their stores, and their new stores are really conducive to drawing people into their prepared-foods areas. They also know their customer extremely well, and a lot of their service practices are built around the idea of community. People who are into the natural and organic movements or the local foods movement, they really like to be around other people who share that knowledge and those buying habits.”
Similarly, Solganik noted that some of the best modern self-service designs allow stations to be staffed, so that shoppers can pick out product themselves, ask for advice or ask for a custom-cut product with equal ease.
“The more self-service you offer, the better,” he said. “I think that we've come to that in many cheese shops, for example, where the cheese is actually in a self-service case, but they offer precut slices of cheese, and they have service available behind it most of the time to cut pieces to order. That to me is an ideal combination. Having a service case that is closed a big percentage of the time is not a real benefit to anybody.”
All of the experts contacted by SN suggested that while there are a number of exciting and promising trends in prepared food right now, such as the mainstreaming of many new ethnic cuisines, retailers should take things slowly when planning any sort of expansion or remodeling of their program.
“This isn't something where you can flip a switch and make a change overnight,” said Hanson. “It really requires a good understanding of your customer base, of your demographics, and understanding of what people are looking for in your store during different day parts — lunch vs. dinner.
“Once you've established that you have a handful of products that are successful, it really requires a process of trial and error to determine which products you could add to your menu and be successful. Those who are innovative and those who are leaders have done a very nice job maintaining those tried-and-true products — the rotisserie chickens, the fried chickens, the meat loaf — and balancing that with a new variety that's going to entice the customer to come back more than once every two weeks.”
FOCUS ON THE GOALS
O'Connor agreed, noting that any expansion or remodeling effort — from what type of display equipment is selected to what type of food is served — should be tied to a clear vision that has thought through several key considerations.
Most important, what is the primary goal of the department, with regard to the overall store: increased traffic, customer loyalty or improved profitability?
“Next, who are you competing with?” she asked. “Outside competition and other departments in your supermarket? Does this new program address the needs and desires of the shoppers who currently shop your store and those who you may attract? Are they looking for fancy? Or home-style? Or vanguard?”
Regardless, the balance of value, quality and convenience offered by prepared-food departments should help keep demand strong, or at least stable, in the near term.
“Customers want meals, and there's no question that they're going to be doing less cooking,” Solganik said. “So, however you can provide them less cooking at a reasonable price is going to be a winner for them.”