Tapping Shoppers' Potential

The second of a three-part deli/prepared food insights series builds on initial shopper research findings that zero in on key stages along the shopper purchase pathway.

As retail and foodservice operators alike fight an ever-increasing battle for the shopper's food dollar, the focus and continued importance of the deli/prepared food department are growing daily.

As the second of a three-part series covering a comprehensive set of retail and shopper studies conducted by Progressive Grocer, Tyson Foods and Meridian Consulting, the latest findings herein directly target a major "knowledge gap" identified by retailers in the first series installment with exciting new shopper research that focuses on the critical early stages of the shopper purchase pathway. These early stages of the pathway focus on the choices shoppers make regarding channel, retailer and eventually department, in regard to deli/prepared food and other meal solution options.

While shopper research in many categories focuses late in the shopper purchase pathway, when shoppers are already in the department, the early stages of channel, retailer and department choices are critical in the meal solution battle, and it's here where the battle is waged.

Earlier retailer research, which appeared in the March 2012 issue of PG, identified these critical early stages of the purchase pathway and their importance in the shopper's decision for meals. We designed our shopper research to address the knowledge gap that retailers said existed here. A Web-based survey was conducted with a broadly representative sample of shoppers. This national omnibus study provides important learning for the industry, as well as a benchmark against which retailer-specific insights will also be developed. The omnibus study identified three major findings:

1 Shopper behavior is still limited by yesterday's perceptions of "deli"; retailers haven't fully translated their intentions into shoppers' perceptions.

In the retail study, it was noted that in today's world of intense cross-channel competition for meals, deli/prepared foods holds the key to redefining the grocery store. While "yesterday's deli" was primarily about lunch, today a modern, up-to-date deli/prepared food department also includes a broad range of solutions for the most important family meal — dinner — and plays an increasingly critical strategic role going forward.

However, this broader retailer vision hasn't been fully communicated to shoppers. To the vast majority of consumers, deli/prepared foods is still "lunch" and "sliced meat/cheese." In fact, 50 percent more shoppers indicate that they visit the department for lunch items than for dinner. And 40 percent go to pick up sliced meat/cheese and are then finished shopping the deli/ prepared food section of the store.

With a more limited shopper perception of the department, this translates into lower traffic for the overall department as well as components within it, including prepared foods in particular. In fact, given the perception that most shoppers have of "deli," frequency of visits is a fraction of other key departments.

2 Focusing on early stages of the shopper purchase pathway can help meet shopper needs, and further leverage the strong growth potential of deli/prepared foods.

The shopper research identifies several important findings: Deli/prepared foods can help address the needs of the ad hoc/last-minute shopper. There is much appropriate focus within the industry on helping shoppers plan ahead with meals/shopping, including circulars, weekly specials and websites. However, 34 percent of shoppers indicate that their typical approach to planning dinners is ad hoc/last-minute. Deli/prepared foods is particularly well suited to address the needs of this large pool of shoppers.

Deli/prepared foods can help grocery retailers compete for a broader range of shopper trips, including those specifically for "tonight's dinner." At this early stage of the shopper purchase pathway, the shopper's decision process for "tonight's dinner" considers not just their favorite grocery store or other retailers, but also a variety of other dinner options as well, including fast food, non-fast food, restaurant eat-in, takeout and delivery.

Shopper research shows that even among ad hoc/last-minute shoppers for dinner, the grocery channel has a solid presence within the shopper decision process as shoppers decide between options and special trips for "dinner tonight." In fact, aside from "stock-up" or routine shopping trips, 26 percent of shoppers indicate that they make a visit to a grocery store one or more times a week just to get something for that night's dinner. Restaurant visits are also strong: 31 percent make a trip to a restaurant to eat dinner there one or more times per week, and 23 percent make a trip to a restaurant one or more times per week to pick up dinner and eat it at home — but the grocery channel has an opportunity to significantly become the destination for "dinner tonight" with deli/prepared foods.

Prepared foods has huge growth upside as a meal solution offering by the grocery channel. When shoppers identify what choices they made for dinner in the past week or a typical week, homemade meals and frozen are two well-developed areas of shopper choice currently provided by the grocery channel. These two choices were used for dinner at least once in the last week (or a typical week) by 94 percent of shoppers for a homemade meal, and by 74 percent of shoppers for a frozen meal.

After these two shopper choices, however, there's a big gap. In looking at prepared foods specifically, the percentage of shoppers who "picked up a prepared entrée from a grocery store" (30 percent) is not only much smaller than the two well-developed shopper choices from grocery retailers noted above (homemade, frozen), it's also smaller than "picked up a prepared meal from a fast-food restaurant" (41 percent).

Prepared meals from a grocery store have significant potential that best practice insights can help address.

3Several best practice areas identified by shoppers are critical to maximize the strong growth potential of deli/prepared foods.

There's a wealth of information that shoppers can provide us. Several selected highlights follow:

First and foremost, it's imperative to establish a strong, distinct and even exciting shopper identity for deli/prepared foods. This is needed to ensure shoppers see the department as more than "lunch" and "sliced meat/cheese." Shopper research also notes this is an imperative because deli/prepared foods is listed well below other departments (including even nonfood departments such as HBC) as an area they view as a favorite and one they enjoy shopping. Only 3 percent of shoppers indicated that deli/prepared foods is their favorite department in terms of the one they most enjoy shopping, compared with others, including produce (31 percent), meat/seafood (15 percent), frozen (11 percent) and bakery (9 percent).

Retailers must create variety and incorporate signature items. Shopper research shows that while convenience is an important reason that shoppers go to restaurants, the appeal of signature items is particularly strong in their decision process. The prepared food sections of many grocers may offer variety, but leverage of several strong signature items is often modest or lacking altogether. Some retailers have created signature items, such as their own chicken pot pies (and much more), with great success.

Emphasize freshness within the overall variety of prepared food offerings. Many items are made the same day the shopper is visiting, but often the perception is that prepared foods are for convenience, and the freshness element is lost in the shopper message and perception. In the shopper study, the biggest gap between "importance" ratings and current "attribute ratings" for prepared foods was in terms of freshness: 52 percent of shoppers indicated that freshness was "extremely important," but only 21 percent gave a similar attribute rating for the prepared foods in their regular grocery stores.

An increase is needed in level and quality of shopper communication before the store as well as in the store. Perceived presence in circulars and other forms of communication is seen as more limited than with other key departments and dinner/meal choices. Only 17 percent of shoppers, for example, indicate that they see prepared foods advertised "extremely often" in their grocery stores' ad circulars, mailings or other communications, versus 32 percent for meat/seafood or 20 percent for frozen.

As noted above, in the battle for a greater share of the shopper's food dollar, the focus and importance of deli/prepared foods continue to grow daily. Understanding how to better meet shopper needs at early stages of the shopper purchase pathway and delivering on best practice priorities that address these needs can help retailers maximize the strong growth potential of deli/prepared foods.

For more information on "Tapping Shoppers' Potential," contact Eric LeBlanc, director of deli/prepared foods marketing at Tyson Foods, at [email protected].

"As grocery gets more competitive, competing just on selling cans of coffee is death. We need to become a perishables store that sells groceries instead of what we are today, which is a grocery store that also sells some perishables." — retailer panelist