Dealing With the New Consumer and the New Retail Environment

jim prevor

The deli department has been, in many ways, the most challenged supermarket perishables department during this pandemic. Although certain product categories, such as sliced meats and cheeses, have seen a nice sales boost, both the prepared foods and broader foodservice categories have not seen the bounce that supermarket deli sales have received overall.

In some ways, this is unexpected. If restaurants are closed, operating at reduced hours or reduced capacity, one would think that supermarket foodservice sales would boom. Why have they not?

Partly it is because of product shift. Many retailers responded to the COVID-19 pandemic by limiting or removing foodservice product offerings, such as salad bars and food bars. There is no evidence, of course, that consumers could get COVID-19 through food, but the pandemic led to a focus on cleanliness that made consumers, and store management, extra concerned about sanitation and cleanliness.

There may also be time management, psychological and economic issues driving consumers away from prepared foods. When consumers are busy rushing to the office or other place of work, they can easily justify running into a supermarket for a sandwich and hot soup for lunch or picking up some prepared food for dinner. If they are at home, well, they may feel they should save some money and avoid the inconvenience of going out and just make their own sandwich at home and open a can of soup.

Financial insecurity is another issue. Some people, of course, have lost jobs or have struggling businesses; recently, the supplemental unemployment benefit that had been established for the pandemic was reduced, so many people will feel they can bread their own chicken cutlet or make their own tuna salad and save some money.

With so many shopping transactions moving online, marketing issues bedevil the deli department and, especially, prepared foods. To a much greater extent than in any other supermarket department, it is the appearance, the smell, the sample, and the impulse idea that drive the purchase. People who never intended to buy a slice of pizza, pick up a Greek salad, take home some nice lasagna or buy some olives will see them at the store and purchase them. But the online ordering doesn’t offer the same enticement, and those sales sometimes don’t happen.

In fact, online “shopping” is often not that at all. Many people just pick up their previous order and re-order with perhaps a few changes. They never, though, are exposed to new products or even reminded of old favorites. Many people would never, for example, put cakes or cookies or similar indulgences on their shopping list, but when they walk through a physical store, they see rainbow cookies or some other indulgence and remember their grandmother giving them this as a treat and they buy. But they will never order the same cookie online.

There is a sense in which the horrible effects of this pandemic will create new potential for supermarket deli operations. First, it is likely that many restaurants will close down. Even for those that are hanging on by doing robust take-out and delivery, when their lease is up, many of these restaurateurs will say it is not worth working day and night just to pay the rent. Second, almost every supermarket has created enhanced remote ordering, pick-up and delivery options; this creates new opportunities for buying from the foodservice side of the supermarket.

Still, the challenge is substantial. Remote ordering reduces substantially the opportunity to effectively merchandise many deli department products. Busy sell-times, say at lunchtime in urban areas, still often mean crowds, and that is a turn-off in a way it never was. New product introductions face an enormous challenge, with sampling and demos often unacceptable or impossible.

One wonders if manufacturers won’t have to help. Perhaps in every delivery, supermarkets could include a “sample bag” of new products, including, say, a small cup or container with a sample of a salad or small piece of lasagna. Rather than investing in demos, perhaps manufacturers could purchase participation in the sample bag.

Online, at the point of ordering, perhaps these sites can be enhanced. Instead of just offering a picture of cheese, maybe each photo can embed a link to a video suggesting its use in, say, macaroni and cheese. Or, as consumers are often time-starved at the moment of ordering, maybe the key is adding retail links to magazine web sites and similar places where consumers, in their leisure, can go find something fun and interesting and order the cheese for the mac and cheese to be automatically delivered with their next grocery order.

We all, of course, continue to pray for normalcy. Hopefully there will be a vaccine that will both keep people safe and boost public confidence. Hopefully lives will return to normal, and people will return to supermarket delis for all the reasons they went there to begin with.

These are all unpredictable though, and, even when shoppers return, things will not be perfect and consumer behavior may change as a result of the pandemic for a very long time. The challenge is to deal with the new consumer and the new retail environment now. We can have confidence that the tools we develop, and their utilization, will be embraced to not only help sales today, but make us better prepared for whatever tomorrow may bring.   DB