As we are coming out of restrictions placed upon us by the COVID-19 pandemic, Food World and Food Trade News asked a panel of industry professionals to address issues with a focus on the Deli, Dairy and Bakery sectors that the grocery world is facing.
FOCUS ON DELI
Dave Lessard
VP-Perishables
The Giant Company
- How has the sales increase in pre-sliced deli products impacted your go-to-market strategy in the deli? Do you anticipate a change in mix (pre-slice vs full service) in the near future?
We have seen a sharp rise in pre-sliced Grab & Go during the COVID timeframe on top of an already growing Grab & Go business. We have adjusted our go-to-market strategy with increased assortment in this segment. The importance of ease of shop and convenience continues to drive our customers’ behaviors which lends itself well to the Grab & Go offerings.
We have also seen a large increase in slicing meats and cheeses via our in-store deli kiosk and through Deli Order Ahead in our app, which again makes the shopping trip much easier for the customer by saving her time.
I believe the service deli as we knew it will never fully go back to pre-COVID ways. Data is showing customers were pushed into trying new and more convenient methods of shopping that they may have been relucent to try pre-COVID. Now, a lot of these customers will not change their newfound shopping patterns.
- Do you expect to reopen/expand your soup and salad bars again? How might they be reimagined? If so, what’s a realistic timeline?
We have started to test reopening some of our hot soup offerings to understand the customer demand to help us better determine a go forward strategy. While we have seen some success with some of our customer trips returning, we’re still evaluating this segment to determine a plan. We will have to continue to monitor these tests and understand what customer demand around these offerings will be as time goes on and the effects of COVID start to diminish. On a positive note, we have seen a large increase in the cold soup category which has mitigated the hot soup sales loss. This may be the way of the future in deli soup.
We have also started to test reopening salad bars to understand the customer demand to help us better determine a go forward strategy. We will utilize customer insights to gauge full reopening across the brand including alternative options. We are exploring the expansion of pre-made salad or Grab & Go assortment and alternative options that exist in the market with third party vendors running, self-contained units and new case formats.
Samer Rahman
VP-Perishables
Allegiance Retail Services
- How has the sales increase in pre-sliced deli products impacted your go-to-market strategy in the deli? Do you anticipate a change in mix (pre-slice vs full service) in the near future?
As the pre-sliced business grows there are two growing segments that will continue to evolve and grow in the future. The fresh sliced programs sliced to order at store level displayed in self-serve cases continue to drive purchases and provide a solution for shoppers that want fresh sliced but do not want to wait for product to be sliced at the counter. In my opinion the long-term success of fresh sliced will be determined by the discipline of the supermarket industry to offer the freshness wholesome product consistently which builds trust and repeat sales. Shoppers continue to be time starved and convenience influences purchase now more than ever “the Amazon effect” if you will. On the other hand manufacturer pre-sliced meat and cheese have grown immensely during the pandemic and will continue as an array of domestic and imported products are offered with extended shelf life. More and more companies are expanding on lifestyle entertaining packages that are perfect for two or more people. I believe the desire to return to normal will initially bring customers back to deli. I think the extent or size of service deli will be influenced in the future by the tight work force we are experiencing. I would imagine most operators will be measuring the contribution to profit and weigh that into the overall shopping experience and weave that into the go to market strategy in the future.
2. Do you expect to reopen/expand your soup and salad bars again? How might they be reimagined? If so, what’s a realistic timeline?
Self-service packaged hot foods are back and customers are engaged in purchasing. I believe with the reopening of buffets many retailers will test the market and customer response and gauge acceptance as they measure sales. We may see a resurgence of service hot foods if the particular store has a dinner and lunch crowd. Soup bars are back open and as customers return back to work and look for quick options for lunch I believe salad bars and soups bars will be in full swing as customer confidence returns.
I believe the customers who had never purchased from a self-service bar pre-COVID will still not buy post-pandemic, no surprise. On a positive note I believe with the spirit of returning back to normal, the self-service bar gives customers an opportunity to customize their choices in purchases and will be a strong factor in determining the future of these bars. Many operators in the metro area will or have plans to reopen the self-service bars.
Owner/President
John F. Martin & Sons Inc.
- How is a smaller, local deli/processed meat manufacturer able to support local retailers better than national brands? What’s your take?
Being a mid-sized local meat processor, we have an advantage to service local retailers better than the larger national brands for a few reasons. Frist, our product is produced locally and we ship local, and our customer base is smaller which allows for a specific focus on each individual customer that is not possible when you are dealing with a national brand. In some cases mid-sized processors are also able to deal directly with the retail stores without the extra layers of distribution that are necessary with a national brand. This can result in quicker responses to the retailers’ needs.
- Can you name the top three challenges affecting the deli business as it applies to John F. Martin?
Labor, labor, labor. In today’s environment, there are many struggles for all manufactures and retailers — labor is everyone’s biggest issue right now.
This issue is throughout our industry from vendors that supply raw product and packaging material to struggling manufacturing plants, trucking companies, and lastly the retailers ability to properly staff labor intensive departments such as traditional deli counters.
It remains to be seen what the long term changes and effects the current labor situation will have on our industry.
FOCUS ON DAIRY
Bob Gleeson
SVP-Merchandising and Marketing
Weis Markets
- With the growing popularity of plant-based dairy alternatives, how have you merchandised and educated your customers to this growth in the dairy department?
The first thing we do is to merchandise plant based offerings in-line where it makes sense next to their dairy based counterparts for best results. We began understanding the successful introduction of plant-based many years ago with soy milk, which was launched and placed right with regular dairy milk offerings. The milk section is one of the most developed sections for plant-based beverages! We pay attention to current trends and what our competition is doing as well as reacting to capitalize on those opportunities. Additionally, we have several non-dairy offerings in our natural/organic dairy case, which is generally a 6 foot case coming out of our produce department in about 90 of our stores. This case serves as a testing area for possible placement into main stream category sets. Right now we have an eye on plant-based cheese for an opportunity in main stream sets.
We are fortunate to have several options available to us through our marketing department when it comes to educating our consumer. The plant-based customer tends to be a little younger, so we have utilized and planned some e-coupon offerings with our key suppliers. We have our Healthy Bites Magazine led by our in-house dieticians highlighting benefits of these products, as well as letting our customers know we are in the plant-based Business. Our monthly circular gives us the ability to group plant based items together in ad blocks. Lastly, we have been working on something like this: “Buy two oat milk beverages, 52 oz., and get a frozen meat alternative item free!” All of these options should help us get the message out.
- Do you anticipate a surge of new product introductions now that the pandemic seems to be easing? And if so, how will you integrate them into your dairy case?
A surge had already started back in 2019, so I think we could say re-igniting the surge! I have never seen anything like it before when it comes to plant-based offerings. Manufacturing partners/suppliers see plant-based as a SURE win over time. This is why we will see an abundance of offerings. Suppliers are not putting offerings out to meet the current sales need, but it is more about them realizing the need to have those offerings as part of their brand portfolios for the future. It does not make our job any easier as far as aligning with the bands and products the customer is truly interested in now.
Regarding integration, as far as utilizing the natural/organic case, we have and evaluate those sales of the relevant items. We will continue to work with supplier partners and watching the competitive market as well. This customer is certainly someone we want to attract. We are prepared to meet the need where it makes sense.
FOCUS ON BAKERY
Christina Hixon
Sales Manager, Bakery
Albertsons Mid-Atlantic
- Has the pandemic created greater opportunities for artisan baked goods?
During the pandemic we saw large increases in two categories that would fall into the artisan baked goods: our artisan breads or breads in general and single serve items. Customers were looking for unique items to pair with at-home meals both in bread and dessert and an artisan item gave them that. Even as restaurants continue to open up, it still tends to be much cheaper to cook and indulge at home. An artisan item gives you high quality ingredients without the cost of dining out mark up.
- If you had a wish list about how your vendors could improve their effectiveness when calling on you, what items might be on that list?
When it comes to vendor effectiveness, I can think of several items that would be on the list that would be better for all of us. For one, follow up with what we discuss in meetings with a timeline of completion. This keeps all action items moving and we don’t have to circle back with what still is outstanding. Secondly, learn the system and be willing to invest the time to do it right. Lastly, keep your point of contact to one person whenever possible so we stay on the same page.
David Neville
Owner
Crest Hill Bakery
- Has the pandemic created greater opportunities for artisan baked goods? Do you see those opportunities rising or descending in the next 18 months?
A resounding yes is the answer to the question. There are many more opportunities for artisan breads if they are of the quality level that hand-made bread shops can produce. Since the collapse of the restaurant industry a year ago, consumers were forced to home-cook meals like never before and that home cooking rapidly drove customers to upgrade their meal quality.
Since breads are used with every meal, customers looked for quality upgrades.
Grocery buyers, realizing another 8-12 percent grocery market share was now available, began to compete for that share by upgrading quality in items adding sales to quality oriented bakery products. Seasonal items have been added along with new exciting items like multi-grain Sourdough for great sandwiches or whole grain bread with dried blueberries for the best breakfast toast you’ve ever eaten, to grocery offerings to keep the product lines interesting and having customers come back again and again to see what’s new. Home menu upgrades drove this recent mindset.
Until the restaurant industry regains its sales potential again, I expect this phenomenon of extra grocery chain sales potential to continue for at least another year or two, and Buyers that are on point with this trend will use this opportunity as a giant demo, reinforcing sales through additional customer visits and market share. It’s up for grabs for the next year at least. May the most aggressive quality bread buyer win!
- The automated processing description is now seemingly applied to all artisan bakery products. Should there be a distinction made to the consumer on which products are created by machine and which are handcrafted?
This question cuts to the heart of quality breads. I run a bread shop with many more bakers than engineering or mechanical maintenance staff. Other plants run with very few bakers and a plethora of mechanics. I would say that is the big difference, quality wise, if you want to compare. The term “artisan” referring to breads, has been hijacked by the plants with lots of mechanics. Their goal is to make bread the fastest for the masses. Seeing the words “artisan breads” on the package does not replace hand forming or slow rising times or baking on a stone hearth, and making breads the way they were made 100 years ago. Although there are more machines available these days to simulate hand forming, there is no replacement for true artisan techniques if you want a great tasting bread.
Chad Vilotti
CFO/VP
Liscio’s Bakery
- Has your ability to purchase necessary packaging supplied worsened or eased up in recent months? Please explain.
It is definitely intensifying and getting worse. Resins for printed bags are going to be commodities that will be scarce and difficult to find this summer, I am told by someone who is close to the situation. Of course, the petroleum industry is going to be tightened and that is also going to hurt. Polybagging and anything in that ilk has already been affected. Corrugated is going up mostly because of transportation issues, but it is not hard to find. Cardboard is hard to find. However, we recycle our cardboard here, and it has tripled in value due to high demand from companies like Amazon who are dropping packages off at people’s doors. Pricing has gone up and waste has gone up. Packaging of our products is expensive. It is a large percentage of our cost.
2. Many retailers have put loose rolls back in the bins. Have you recouped that business since the pandemic changed the way consumers shop?
We were able to put our extended life product immediately into action when loose rolls became temporarily extinct. So, that was net-net for us. We gained bag business with the extended shelf-life products we manufacture, and we recouped some of the loose roll business recently. It’s been positive from that point of view. The idea or myth that the Coronavirus is spread through surface touch has kind of been extinguished, so that has allowed loose rolls and other loose items to come back into the mainstream.