Private Label Buyer

A Walk Down the Aisle- Deli

May 10, 2011



Food retailers have to put more emphasis on in-store marketing for private label deli items. Read what else PLBuyer secret shoppers  found that can help you improve sales of your deli case PL items.

Retailers are not using price tag comparisons between their private label deli case products and deli case national brands, report PLBuyer’s secret shoppers. Of the four stores chosen throughout the country for our secret visits, only one carried price tag comparisons in the deli case between private label and branded items.

In-store private label advertisements were scarce as well. Half of the four stores visited carried an advertisement promoting private label deli products. Most did, however, stock their merchandise next to their national brand competitor in the deli case.

PLBuyer sent four of its secret shoppers to check out deli cases of food retailers in Missouri, California, Arizona and North Carolina the last weekend of March, 2011, and asked them to evaluate how their local stores market and merchandise their deli private label products.

In addition to looking for in-store merchandising, shoppers also recorded prices of comparable private label and national brand turkey, ham, American cheese and potato salad and conducted their own taste tests. The goal of our walks down the aisle is to provide you, our readers, with market intelligence and insight you can use to increase your sales.
 
MINIMAL MARKETING

Private label marketing in the deli section remains scarce, according to data found by our secret shoppers. Shopper Mike G. reported only a single sign promoting private label deli items at the Price Chopper in Kansas City, Mo.; that, and a store ad at a Lowe's were the only forms of in-store private label promotion found by any of our team. The only consistent form of marketing was inside the deli case itself; national brand meats and cheeses were placed side-by-side with private label for shopper comparison. This was true at all four stores visited across the country.

 “The deli meats and cheeses were grouped together with their store brand,” says Sarah C. who visited the Fry’s in Mesa, Ariz. “So Private Selection meats and cheeses were on one side of the deli case and Boar’s Head meats and cheeses were on the other.” While not directly side-by-side the clear separation of brand names and store brands allows consumers to compare prices in a direct manner. These numbers are in stark contrast to the packaged deli meat aisle analysis shown in PLBuyer’s Jan. 2011 issue where only half the stores visited carried side-by-side comparisons. 

Of the four stores visited, only Lowe’s in St. Louis carried any form of on-shelf price comparisons of its deli meats. Rather than separate the products, both private label and national brands were treated equally and shared adequate shelf space in the deli counter. According to shopper Andy Z., shoppers could find Hormel, Oscar Meyer, Land O’ Lakes and Lowe’s brands displayed.

Prices for private label offerings generally were lower than their national brand competitors in all stores visited.  Although there were national brands represented, Mike G., who visited the Price Chopper in Kansas City, Mo., notes that there was more variety of private label cold cut options presented in the deli case. Fry’s in Arizona provided customers with the most options and noticeable price differences. Across the board there, private label deli case items were at least one dollar cheaper than their national brand competitors. For example, Fry’s national brand Boar’s Head sells deli case turkey breast for $9.99 per pound while private brand Private Selection was priced at $7.99 per pound. This remains consistent with the data found by our secret shopper report in the packaged deli meat aisle (see PLBuyer Jan. 2011) which also has a one dollar or more difference, on average.
 
TASTE TESTS

Shopper Mike G. tried Price Chopper’s double smoked ham. “It’s a tasty product, but nothing unique or special. It seems clear that a big part of the deli value is real or perceived benefit from the deli-counter selection and service experience. It’s just more fun to pick something out and have someone serve you,” he says.

Ham was popular for taste testing by our shoppers. Sarah C. tried the Fry’s Private Selection ham which she described as “Nice tasting deli ham. I tried the sweet sliced ham which tastes similar to ham off the bone. It tasted fresh with a hint of sweetness.”

Secret shopper Andy Z. tried the ham at Lowe’s. Andy described it as “comparable to national brands relative to taste. I like it and think that it is tough to tell the difference.”

Judi M. tried Safeway’s American potato salad and did not have as good an experience. “The potato salad tasted salty and metallic. Potato salad is one of the few dishes that I always make from scratch,” she explained.
 
OTHER OBSERVATIONS

Organizational structure does not seem to be clearly defined inside the deli case. Of the four stores visited by our secret shoppers, none of them had any consistent strategy for showcasing private label deli products to consumers. 

There also does not seem to be a wide variety of national brand choices for the consumer. Sarah C. noted that the Safeway she visited only carried the national brand Boar’s Head or the private label Private Selection. This lack of variety in selection limits the choice of the consumer but at the same gives them a direct comparison between private label and one branded competitor.

Judi M. visited Safeway and found no American cheese anywhere in the deli case. “They did not carry American cheese in the deli section. Cheddar, Swiss and others were there but not American. American cheese was with luncheon meats in a different part of the store,” she explains.
 
WHAT THE EXPERTS THINK

A look into the deli case can give you insight into the current cultural makeup of consumers, explains Randy Dunlap, managing director of the Bloomington, Minn.-based consulting firm RSM McGladrey. The globalization of markets over the past 30 to 40 years has expanded the tastes of the average consumer and what they can expect in the deli aisle.

“From a consumer’s perspective there is a lot more selection than there was a few decades ago,” explains Dunlap. “Suddenly there are new spices on the market that cater to the pallets of the new consumer.”

Consumers today are seeking out new flavors in the deli counter. Even things many take for granted, like Cajun-flavored turkey breast, would not have been widely accepted in grocery stores a few years ago, he says.

The recession had an impact on the way consumers shop and private label deli meats saw growth as a result, says Dunlap. The challenge, he thinks, will be for private label to hold onto its market now that the economy is growing again and consumer confidence is on the rise.

With the Baby Boom approaching its retirement years, Dunlap foresees a greater demand for healthier products and a greater knowledge of what goes into each product. A variety of nutritional information systems are being used now. Dunlap points to systems like the popular NuVal nutritional scoring system that works on a 1-100 scoring system to help consumers make the healthier choice. Others are using a “Guided Stars” program that rates food nutrition on a scale of one to three stars based on ingredients.
Consumers have indicated that the supermarket is still the top place for buying fresh food items, says a January 2011 report by Chicago-based research firm Mintel International Group.

“These findings indicate just how important fresh food departments are to a supermarket’s operations, and how they remain one of the greater points of differentiation compared to other outlet types,” explains the study.

Eighty-seven percent of consumers buy deli products such as sliced meats, cheeses and salads from the supermarket a majority of the time, the study found. “Across all of the categories discussed, supermarkets tend to do best with 25-44 [year olds]. These are the prime family years, and the convenience of knowing there is a good chance of finding what they want instead of having to make additional trips with children in tow is appealing,” says Mintel.