Wal-Mart Stores Inc. is blazing its own merchandising path.

Wal-Mart Stores Inc. has achieved its position as the world’s largest retailer by leveraging an “Every Day Low Price” strategy to attract and retain value-conscious shoppers. And that blueprint extends to the deli, where price — as evidenced by the sale of $4.48 rotisserie chickens — remains a key merchandising element.

Yet, the Bentonville, Ark.-based retailer is not positioning price alone as a recipe for deli success. Wal-Mart is actively testing new products and sales concepts as it strives to keep pace with consumers’ growing interest in taste, convenience and health.

Initiatives include the launch of a sandwich bar, hot soup stations, new product sizes and the use of cooking oils with zero grams of trans fat when developing hot prepared offerings.

“Wal-Mart is the primary place for many shoppers to buy food, so such new elements are a natural extension for the deli,” says Doug Adams, president of Prime Consulting Group, a Bannockburn, Ill.-based retail advisory firm. “The deli can be a good draw in building customer loyalty, which can spill over into other departments.”

Wal-Mart Stores operates more than 3,600 retail units in the United States, including more than 1,900 Wal-Mart Supercenters and 95 Neighborhood Markets, both of which feature full-scale grocery operations. Other stores include more than 575 Sam’s Club locations — which typically sell deli items in bulk — and more than 1,100 Wal-Mart units that offer a limited amount of prepackaged frozen and refrigerated deli products.

Some of the deli’s greatest growth is occurring in the convenience sector where take-out meals, including take-and-bake pizzas and hot selections, are increasing in popularity. The 16-inch pizzas — which are prepared by an undisclosed supplier and typically priced between $9.44 and $9.88 — have been available for about 18 months and are being merchandised in as much as 30 linear feet of space, compared to about 4 linear feet at launch.

“It’s the biggest single growing piece of our business,” says Peter Redmond, Wal-Mart vice president of deli and seafood.

Two Wal-Mart distribution centers, meanwhile, will soon test a smaller 12-inch pizza with an opening price point of about $6.98.

“The 16-inch pizza does great for big families, but a 12-inch is probably all that a family of four needs,” Redmond explains.

Also expanding are stores’ hot food areas. While the sections previously comprised 8 linear feet of full- and self-service items, outlets now merchandise selections in over/under cases that provide 8 feet of space on top for full-service foods, and an additional 8 feet underneath for self-service products. Such expansion is important because delis are more actively competing with foodservice locations for take-out business.

“A few years ago I never would have looked at Wendy’s or KFC as a competitor, but that has changed,” Redmond says. “More consumers are making their choice of where to buy food based on convenience, and we’re fighting to offer the same sort of solutions.”

Demographic approach

While many of Wal-Mart’s deli selections are available at all locations, some hot and cold offerings vary between regions — and even stores within the same city — based on the demographics and preferences of shoppers.

“Everybody likes pepperoni pizza, but cheese pizza doesn’t do well in some areas,” Redmond notes. “It is the same way in the hot case. We might be able to sell livers and gizzards in Arkansas, but we probably couldn’t give them away in Montana.”

Redmond says Wal-Mart conducts extensive consumer research to determine the optimal array of items that should be merchandised in each store’s deli. Methods include surveys, focus groups and shopper intercepts, along with insights from suppliers.

An internal database also enables operators to better determine the appropriate marketing methods for their stores based on the successful tactics being used in outlets that have similar customer demographics.

“We throw all those things into the hopper and come out with a fairly good solution,” Redmond says. “We still can take deli merchandising a lot further, but it has become remarkably better over the last several years.”

The overriding deli emphasis, he notes, is on the products that generate the most business, such as take-and-bake pizza.

“We major in the majors,” he says. “If there is a category we want to be in, we’ll go after it in a big way. But we are not going into a segment if we don’t think we can do much with it. For instance, we made the decision several years ago that if we were going to do hot foods, we would need to increase the space for it.”

As result of that focus, Wal-Mart delis usually carry fewer items than those in conventional supermarkets. Such selections as specialty cheeses and ethnic meats are not offered in many stores because they typically are not sought by Wal-Mart’s prime value-conscious shopper, Redmond notes.

One exception is a new outlet in Plano, Texas, which has an 8-foot cheese island that only contains specialty and imported products. The store, which opened last year, functions as an “active laboratory” for testing new products and merchandising ideas. Featured are more than 2,000 premium items, including meats and gourmet cheeses, made-to-order and hot panini sandwiches, hot pizza and a fresh sushi bar.

Yet, the price-driven shopper remains Wal-Mart’s key marketing target. “We don’t compete on price, we own price,” Redmond says. “The thing that gets people in the door isn’t that I run a spectacular deli — it’s that I have very good prices. And we play that very hard.”

Offerings include a $4.48 fully cooked rotisserie chicken, which is several dollars less than the price being charged by many traditional grocers. While Redmond says the 2.2-pound net-weight product remains popular, he notes that Wal-Mart is considering also selling a bird that will weigh about 4 pounds. The larger chicken currently is being tested in a couple of markets.

“We see the category growing without too much cannibalization,” he says. “A 2.2-pound chicken seems like a fair amount of weight, but it may not be enough for a family of four.”

Taking initiative

With its test of a freshly made sandwich bar, Wal-Mart could eventually follow the lead of many conventional delis that position their sandwich stations as key vehicles for competing with take-out restaurants. Most Wal-Mart outlets only sell pre-made sandwiches that are prepared in the stores.

“Our sandwich business is very robust and the bar can be another avenue,” Redmond says. “But it requires a very strong commitment to staffing.”

Several Wal-Mart stores, meanwhile, also recently began a hot-soup test.

“There are a ton of things we are trying to do and many of them are geared around convenience,” he says. “We’re trying to figure out what elements fit best into our stores.”

Perhaps the most prominent convenience ingredient is the deli’s location near the front entrances of stores — and approximately 20 feet from checkout lanes. The design makes it easier for time-conscious shoppers to more quickly purchase meals, and negates the need to deploy cash registers in the deli area, Redmond notes.

Some analysts, however, say it still will be difficult for many Wal-Mart delis to attract lunchtime traffic because a large number of stores are inconveniently situated outside of towns and away from office buildings.

“A Wal-Mart Supercenter generates large business, but it’s not from the multiple-trips-a-week customer, but by those who visit every other weekend or once a month to stock up on food,” says W. Frank Dell, president of Dellmart & Co., a Stamford, Conn.-based retail consultancy. “Stores will sell more sandwiches to weekend customers who want to eat while they are shopping, but Subway has nothing to worry about.”

To further generate customer interest in the deli, Wal-Mart also locates island displays with two end-caps in the self-service areas. Different items are routinely promoted on the fixtures, Redmond says. They include “Every Day Low Price” products — such as take-and-bake pizzas — and foods that are being sold for less because of discounts from suppliers.

While the delis generate slightly greater business from full-service applications, Redmond says more activity is shifting to the self-service products.

“It’s inevitable that customers are going to self-service because of their interest in convenience,” he notes. “As long as I hit the matrix I’m going after, we are happy to support that change.”

Indeed, in an attempt to further leverage shopper interest in quick meals, two Wal-Mart distribution centers are testing products that are similar to the home-meal replacement items that are popular in the United Kingdom, Redmond says. While he won’t release details, he notes that “we think it is going to be huge for us.”

Such deli initiatives are among the merchandising endeavors that differentiate Wal-Mart from many conventional supermarkets.

While more chains, for instance, are adding seating or emphasizing in-store dining as they position the deli as an alternative to fast-food and fast-casual restaurants, Redmond says such actions are not crucial for success.

Wal-Mart offers seating in some stores, but Redmond notes that it “does not seem to resonate with customers. The areas stay empty almost all of the time.”

He speculates that most consumers who visit the deli for a meal prefer to take the food home or back to the office.

Wal-Mart outlets — except those targeting specific ethnic groups — also tend to market domestic rather than imported meats and cheeses.

“The issue is not whether we can (sell specialty foods),” Redmond says, “it is if that is what our customers are looking for.”

And while Wal-Mart recently began using trans fat-free cooking oils in developing prepared meals, and is marketing a variety of salads, Redmond says delis are not specifically targeting the health-conscious shopper.

“We don’t have a rush of people saying we need this or that healthy item,” he notes. ”Our goal is not to be all things to all people, but we do offer a good assortment of products.”

In yet another digression from many competitors, Wal-Mart delis do not join with other store depart­ments in cross-merchandising items. Red­mond says the practice is unnecessary as two of the major partner candidates — the bakery and produce areas — are situated within 30 feet of delis and easily visible and accessible to deli customers.

In addition, while Redmond predicts that many deli competitors will attempt to woo customers by upgrading their full-service operations, he says Wal-Mart is not likely to follow suit. Wal-Mart’s largest full-service counters are about 28 feet long and carry about 40 varieties of meats and cheeses.

“We have no interest in trying to make a service deli higher-end outside of a market that deserves or needs it, or adding items just for the sake of it,” he says. “We want to be right in what we are doing.”

In contrast, Wal-Mart’s emphasis on self-service is likely to become more robust over the next several years, with ready-to-eat foods and other home-meal replacement options projected to drive volume, Redmond notes.

“One of the biggest changes is that people don’t seem to want to cook as much as before, and they are looking more to quick-service restaurants and groceries to come up with solutions,” he adds.