Categories / Retailer Features / Deli / Spreads
Cover Story: Private Label Deli

Expanding Our Deli Horizons

Retailers bring sophistication to private label offerings, making deli departments into a destination.

May 10, 2013

For an increasing range of food-savvy consumers, the days of approaching the supermarket deli with a mindset of simply “1 pound of sliced ham, 1 pound of

Jump to:

sliced turkey, half-pound of sliced American cheese, 1 pound of potato salad” have started drifting into mere memory.

Sure, the staples continue to sell well. But today’s deli has so much more to offer. Deli departments across the board have begun to mature in sophistication and scope – and in novel directions that directly compete with traditional restaurants, with private label leading the way.

So although today’s shopping lists still include perennial standby staples such as ham, turkey, American cheese and potato salad, they also increasingly include items like “two orders of kung pao scallops, Asiago croquettes, a rack of Carolina-smoked baby-back ribs, a parbaked caramelized onion and applewood bacon flatbread” – and that potato salad very well might include notable accents from ingredients such as purple Peruvian potatoes and smoky bacon.

The Deli as Food Court

Items such as chicken, pizza and ribs – and others of their restaurant-leaning ilk – are seeing significant traction in the deli today. Although some supermarkets long have incorporated branded foodservice options, such as a Starbucks counter, inside their doors, the current pattern is to create unique, store-branded concepts in the deli area that meet highly diversified consumer take-out desires and entertaining needs, and provide sit-down dining at available café-style seating areas.

Some retailers even have added full-fledged restaurants with table service, along with pubs and wine bars. These prepared-foods and foodservice concepts serve as extensions of retailers’ private label efforts, further cultivating the chain’s own branding and creating combined destination shopping and dining opportunities. Alignment of the overall store concept with its prepared-foods and foodservice options is vital to consumer acceptance – and provides an ideal opportunity for extended private label branding and merchandising.

Multiple supermarket chains have begun demonstrating their commitment to expanding the deli into a veritable food court.

Kings Food Markets recently opened a new store in Gillette, N.J. – the first to showcase its MarketSquare.

“Our team created the MarketSquare concept to allow customers to see, hear, smell, touch and taste a full culinary experience through different ‘shops’ within the square,” said Scott Zoeller, senior director, deli sales and merchandising at Kings Food Markets. “The MarketSquare brings together an array of international flavors with the convenience of local and fast options.”

He said the inspiration for this concept came from elements found at stores throughout the Kings Food Markets footprint.

The store offers sandwiches (including gluten-free and vegan), but so much more. Its “Chef-Inspired Gourmet Meals to Go” include grilled “scampi style” shrimp, bruschetta polenta cake, roasted vegetable stack, chicken Parmesan, spring vegetables, sweet garlic roasted artichokes, and a pasta salad with asparagus, tarragon and fresh peas.

Its foodservice “shops” include a chef-staffed hibachi station (noodle bowls), brick-oven Neapolitan-style pizza (Margherita, Nutella), hand-rolled sushi, a “grain exchange” (bean and grain salads), mezze bars (olives, falafel, hummus, antipasti), coffee house, and soups.

Other prepared foods of note from the chain have included coffee and chili braised beef short ribs, black truffle macaroni-and-cheese, and a carrot soufflé side dish. Many items are prepared by in-store chefs.

Zoeller said Kings Food Markets added breakfast options to the lineup of late.

“We have added yogurt parfait varieties for breakfast on-the-go,” he said.

Dietary niches also get a nod. The soup bar, he said, “now includes 25 varieties, such as vegan, organic, gluten-free and reduced-sodium options. Many of our sandwiches, salads and other prepared options have been tailored to meet these dietary requirements, as well.”

Zoeller described the chain’s prepared foods as “legacy or newly developed recipes.”

Publix Super Markets began reimagining its deli back in 2007 in conjunction with the opening of a new store in Lake Mary, Fla. – one that features a 4,500-square-foot “culinary prepared foods experience with over 80 entrées …”

Beyond what Publix traditionally features in its deli, the new concept includes several stations with cooked-to-order items: Pacific Wok (kung pao scallops, Mongolian beef), The Grill (curiyaki salmon, churrasco steaks), The Carvery (cedar plank salmon, hickory and molasses crusted tenderloin of beef, slow-cooked pot roast), Chef’s Selections (comfort, gourmet entrées), Mediterranean Oven (pizza, roasted Italian, Greek and Spanish entrées), sandwiches, salads, soups and a Coffee Bar (coffee, hot chocolate, frozen fruit drinks). The rotisserie options have included an ancho-cherry barbecue chicken, and some stores have cafés for in-store dining.

“Where practical, we have taken some of these venues and placed them in our mainstream deli departments to offer our customers a greater selection of meal solutions,” said Maria Brous, director of media and community relations for Publix. “Publix GreenWise Markets and larger-format stores offer many of these venues.”

Wegmans offers a variety of prepared foods, including Parmesan risotto, tomato scallion rice, roasted yams, a range of potatoes (crispy roasted rosemary potatoes, potato pepper Jack gratin, scalloped potatoes), and potato pancakes and other “cakes” such as apple-almond-yam cakes. Most stores offer sushi, cold and hot subs, wings, and carryout pizza, with the latter including specialty options such as arugula and fresh mozzarella.

Wegmans also offers naan (flatbread) pizzas in a number of standard and specialty varieties. Some stores even offer made-to-order steamed crab and shellfish.

Other prepared foods at select Wegmans locations include a Hot Italian Bar (with chicken Parmesan, beef braciola, chicken Marsala, cheese manicotti, Tuscan lasagna) and a Hot Veggie Bar (with broccoli with basil pesto, Tuscan garbanzo beans and kale, roasted butternut squash, garlicky greens, farro with mushrooms and roasted tomatoes).

Other Wegmans bar concepts include a Homestyle Bar and an Asian Wokery Bar. These bars feature counter seating with a view of chefs preparing the made-to-order items. Some Wegmans stores include Market Cafés, with full menus, offering seating for up to 500.

“I think retail brands such as Wegmans have provided an incredible option for consumers to dine-in,” said Richard Keys, co-founder of Food & Drink Resources. “They are providing high-quality, consistent food options for their consumers utilizing familiar food products found in the store. They have also incorporated a setting that makes you feel comfortable while dining-in.”

Other examples include:

• Whole Foods Market, where prepared foods departments dotted throughout the deli can include different types of restaurants (ethnic, burger, barbecue, pizza) and taverns or wine bars, as well as sushi, seafood, raw food, taco, salad, cookie, sandwich, and olive bars.

• Mariano’s Fresh Market, which carries Roundy’s and Roundy’s Select private label products in the deli, augments stone-oven pizzas and custom-made sandwiches with its Chef’s Collection $6 Meals and World Eats Hot Bar, as well as options like a barbecue counter, sushi bar and oyster bar.

• Price Chopper’s new 90,000-square-foot concept store, set to open in the fall in Latham, N.Y., will house over a dozen quick-service restaurant concepts, some of which will be branded –like Starbucks – and others will be private label options, developed specifically for the chain. In-store seating is projected to accommodate up to 140—with up to 40 or 50 more outside when seasonally possible.

Deli Diversification

Everyday deli meats, cheeses and salads have been joined by a new breed of upscale and culinary-forward options over the past few years.

Everyday deli meats, cheeses and salads have been joined by a new breed of upscale and culinary-forward options over the past few years.

“The two biggest changes have been more private label offerings in the deli – and more premium private label products,” says Mary Kay O’Connor, vice president of education for the International Dairy-Deli-Bakery Association in Madison, Wis. “Higher-quality deli private label products can be seen as differentiators, offering more competitive leverage between retailers.”

A case in point is Kroger’s Private Selection line, which includes deli products that have a decidedly upscale, gourmet, artisan ring to them: USDA Choice sliced Angus Cajun roast beef, sliced rotisserie bourbon or Buffalo chicken breast, oven-roasted maple or honey smoked turkey breast, home-style slow-roasted New York style beef pastrami.

The cheese end of things includes products such as Asiago, Brie, Camembert, crumbled goat, extra-aged Parmesan, horseradish Cheddar and smoked Gouda.

Aldi has been busy polishing its U.S. presence of late, opening new units and remodeling existing stores to mirror its updated store design – incorporating natural light, raised ceilings, wider aisles, etc. These moves accompany a progression into premium territory, and the chain recently announced that U.S. stores would begin carrying its Specially Selected lines – already proven popular in its European stores – including cheeses such as Havarti (plain, dill, jalapeño), blue crumbles, feta crumbles and goat logs (plain, honey, garlic and herb). Aldi President Chuck Youngstrom said in a news release that the line would help “meet our customers’ increasing demand for premium, quality food at affordable prices.”

When it comes to prepared salads, the deli counter has long incorporated a variety of standard sides such as potato salad, coleslaw, and three-bean salad. These options, too, are seeing more interesting company these days.

As part of its private label Signature Café, Safeway offers 8 grain farfalle pasta with arugula and gorgonzola, Southwestern fajita, Napa Valley cabbage, and spicy peanut noodle salads, among others. The Safeway deli also offers up various soups, fried chicken, sandwiches, pizza and St. Louis style ribs.

Be Prepared

For time-strapped consumers, the convenience of having items such as ready-to-eat slow-cooked barbecue ribs, rotisserie chicken, complete meals and more available in the deli can prove quite attractive – and sales have reflected this desire. Nielsen Perishables Group in Chicago notes that deli prepared foods, the largest contributor to total deli department sales, posted private label dollar sales growth of 7.5 percent and volume growth of 5.3 percent for the 52 weeks that ended Feb. 23. Over this period, Nielsen notes that private label sales in the deli department overall were positive, outpacing branded growth in terms of both dollars and volume, up 6.5 percent and 5.1 percent, respectively. The firm notes that private label steadily captures about one-third of total deli department sales.

In her March 2013 “RMS Monitor Product Category Trend Report,” Jenny Anderson, director of research & consulting at Technomic, said: “Retailers are becoming more capable foodservice operators, with some already well-established as product (and concept) innovators, and others still in earlier stages of that journey (and standing to benefit even more strongly from foodservice expertise from outside sources). They are not only offering their customers restaurant-quality foods, but they are becoming restaurants. Quick-service alternatives can now be found in a variety of retail segments, and full-service concepts are joining them.

“Retailers have shown that they are committed to RMS (retail meal solutions) growth and willing to think well beyond the roots of retail foodservice in terms of product, preparation and equipment,” Anderson said. “Innovation is top-of-mind, and changes in the space continue to come rapidly, making new ideas vital, whether they center on basic updates to remain competitive or more-cutting-edge solutions for differentiation.”

Flex Your Culinary Chops

A common thread in many of these new-era delis is use of the word “chef” – “chef-prepared,” “chef-inspired.” At a time when popular culture continues to embrace the chef as its champion, and with all things culinary steadfastly driving the food industry at large forward, retailers are developing – and flexing – their culinary chops.

As the economy starts to improve and people begin eating out with increased frequency, this culinary alignment is a savvy move. To make the investment into these expanded delis pay dividends, retailers need to effectively pull more away-from-home food dollars from traditional restaurants. And that will only work if the prepared foods and foodservice options at retail grocery operations are in step with the leading culinary edge of a given store’s core demographic.

Flexibility also is a desired attribute. Incorporating customization capabilities into the mix will help drive more traffic, particularly with Millennials – and the older and younger generations they’re influencing.

 “According to IDDBA research,” O’Connor said, “retail deli prepared food offers a better value proposition over restaurant foodservice. And the customer’s perception is that delis offer more-healthful products, too. The more retailers can market these two core strengths, especially to customers that are already in the supermarket but not shopping the deli, the more deli prepared food sales will be propelled forward.”  

Leveraging Private Label

Retailers’ private label lines continue to expand, and not just in the deli. So when transforming a traditional deli department into a veritable food court, retailers should consider leveraging their existing private label supply and manufacturing relationships to ease the transition and minimize required levels of new sourcing.

When already carrying a private label smoked andouille sausage, for instance, sourcing that same product, perhaps frozen and presliced along the bias to desired specifications, would help make quick work of a prepared jambalaya for the steam table in the deli.

A caramelized onion chicken burger patty that’s packaged and sold in the freezer case as part of a retailer’s private label line could also hit a prepared-to-order carry-out “better burger” menu in the deli.

A Chinese five spice seasoning blend in the baking aisle could be on-hand, sourced in bulk, in the deli to add the right ethnic-fusion kick to Polynesian barbecue short ribs. Adding a display in close vicinity of the pickup counter featuring the store’s private label spice blends used in the dishes could serve as a savvy, tacit merchandising touch.

Although service and holding details – such as whether the products will be offered on-demand or made to order, packaged or by the pound from the deli case, held in steam tables or under warming lamps, etc. – can affect some manufacturing details related to stability, color, flavor and other factors, in many cases, reformulation might not be necessary, thereby reducing capital input and strengthening margins.

Most retailers will benefit from hiring trained, certified chefs to staff higher-culinary stations. But sourcing preseasoned, marinated and otherwise partially prepped ingredients, ready for speed-scratch, in-store finishing in the deli, can lower the required skill level of staff members managing other, more-straightforward stations.

“You need to leverage your relationships with your food and beverage vendors to develop food products that meet your needs, as well your consumers’ needs,” said Richard Keys, co-founder of Food & Drink Resources. “There is an abundance of high-quality, custom food and beverage manufacturers out there today. You need to do your homework and partner with the right company.”

Retailers need their suppliers to commit to “a true partnership,” Keys said.

“This is a process, and they need the support of their vendors to develop products that exceed their consumers’ expectations by delivering a consistent, high-quality product,” he said. Anything you can imagine can be manufactured today. It is a great time to be in the foodservice industry.” 

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