The most-often-cited reason by our surveyed deli shoppers for not buying products from the full-service deli or picking up grab-and-go prepared foods is price."
Even as budget-busting inflation has prompted many shoppers to pull back on grocery purchases, one area of the store has proved to be resilient and offers opportunities for growth: deli prepared foods.
Sales of meal solutions have held their own as shoppers choose supermarket take-home foods or hybrid meals that include prepared or semi-prepared items as their last-minute meal solutions, rather than run to a nearby fast-food or fast-casual restaurant. Here’s how the numbers stack up: IRI and 210 Analytics found Q3 2022 dollar sales of deli prepared foods were up 9% compared to Q3 2021. Importantly, recent unit sales versus a year ago are solid in a number of segments: October unit sales were higher for side dishes (2.6%), soups and chilis (2.2%), pizza (1.9%) and combination meals (2%).
Even as inflation has prompted many grocery shoppers to explore other channels, I believe there’s a real opportunity to grow sales of prepared foods as consumers become increasingly weary. According to IRI, more than half of households ordered meals to go and nearly 20% ordered from a restaurant for home delivery in September — and grocery retailers with A-plus prepared foods programs are well positioned to eat into that business.
What are grocery shoppers themselves saying? Our November Pulse Survey of more than 1,000 U.S. adults who do most of their household’s grocery shopping or share the responsibility, do the majority of their shopping at traditional supermarkets and typically shop the deli found nearly 80% of these shoppers have purchased the same number or more prepared dishes or meal kits in the last three months. What’s more, nearly 90% of those buying deli prepared foods or meal kits consider them an alternative to restaurant foods for last-minute dinner plans — and a full one-fourth of them are choosing these options over restaurant meals three or four times a month.
Clearly, supermarket operators with high-quality deli programs can become part of shoppers’ nearly-meal-time decision-making. To attract and keep these hungry shoppers, retailers should ask themselves:
Who am I? What am I? Do you have a distinctive identity? What is your full-service deli or grab-and-go offer most known for? Service? Convenience? Quality? Variety? Value? How do your prepared food offerings differentiate you from other grocers? Are your shoppers making a special trip elsewhere for their lesser-priced rotisserie chicken or signature heat-at-home entrées?
Should we be cheaper than Chipotle? We know shoppers are actively comparing price and going for the best deals. The most-often-cited reason by our surveyed deli shoppers for not buying products from the full-service deli or picking up grab-and-go prepared foods is price.
When Popmenu asked consumers who increased their restaurant spending this year why they were eating out more often, more than one-third said “grocery prices are so high, it’s more cost-effective to order from restaurants.” How does your menu pricing stack up against your packaged goods pricing and, more importantly, the price of fast-food and fast-casual meals in your market?
Still, we’re consistently seeing consumers rewarding quality. While retail prices are very important, especially now, volume isn’t driven solely by huge margin cuts.
Are we boring or missing opportunities to reach new deli shoppers? Beyond chicken fingers, mashed potatoes, steak fries and mac-and-cheese, what are you serving up today for shoppers to serve tonight? Shoppers want variety and it’s increasingly important to introduce new dishes to keep demand from leaking to foodservice operators. The pandemic’s effect on eat-in dining awakened many shoppers to deli prepared foods — and they’re looking for items that are on-trend for healthy and specialized diets, require minimal preparation and offer maximum taste. For instance, there are remarkable vegan meal solutions, including sandwiches and entrees built with meat substitutes.
In many areas of the supermarket, new product introductions are dictated by a schedule. But innovation in prepared foods is critical off cycle to say goodbye to poor performers and to make room for trending flavors. Changing seasons, holidays and multicultural celebrations offer opportunities for continuous innovation and staying fresh.
Also, committing to supplier diversity keeps menus fresh and can help minimize supply chain disruptions. At times, the most successful menu innovation is born from product and ingredient availability.
Are we taking cues from local favorites and TikTok? What flavors and dishes are popular at the local take-out joint and, more broadly, social media? Cheese curds are flying into baskets at one chain’s Midwest stores. Or consider this year’s hottest TikTok food trends: Green Goddess salad, lemon pasta, birria tacos and Korean cucumber salad.
Tap into foodservice reports and lean into sales agencies that bring the latest insights into culinary trends.
Are we watching our wait? Convenience continues to drive sales across store-perimeter categories. When we asked supermarket deli shoppers why they don’t typically buy full-service deli items, 27% said “long wait time/slow service” is one of their Top 2 reasons. Making grab-and-go offerings fast and easy to purchase is critical to turning customers into meal-solution shoppers.
And what about hungry customers outside the store? Are ordering/delivery/pickup options and service on par with the local fast casuals’? Deli e-comm sales for pickup or delivery have grown and capitalizing (and profitably executing) the option to easily order prepared foods alone or shop the whole store online and add center-store products to meal-time orders is key to hanging on to last-minute-meal shoppers.
Can we extend our success in prepared foods beyond the deli? One merchandising mindset gaining in popularity is removing department barriers to develop meal solutions that bridge produce, bakery, deli, meat and seafood departments. When shoppers walk in, are they pulled into the deli area and exposed to all of your meal solutions? If they want a fast, to-be-eaten-soon meal for themselves or their families, can they grab the components quickly without shopping the entire store?
The store perimeter continues to be a key differentiator for grocery retailers and the table is set for prepared foods to be its main course.
