Spotlight On The Deli

Today's in-store delis offer much more than custom-sliced ham, potato salad and other picnic and party fare traditionally sold by the pound. Many of them now are true meal-time destinations, boasting offerings ranging from hot rotisserie chickens and pizzas to signature salads and sandwiches packaged with grab-and-go convenience in mind.

But when it comes to merchandising their own brands within the deli space, retailers vary greatly in their approach. To get an idea of what a few of them are doing well (and perhaps not so well) here, we toured the in-store delis of three North Carolina stores: a Food Lion store in Durham; a Lowes Foods store in Raleigh; and a Harris Teeter store also located in Raleigh. All of the visits took place in early August.

Food Lion

General observations: The deli department in this Food Lion store is located in the front of the store, on the left side (looking into the store from the front entrance). The area is smallish in comparison to the other two delis we visited (but this store also was the smallest of the three stores we visited) and is combined with the bakery area.

The deli features a four-sided shelved refrigerated case situated a few feet in front of the service deli area that was stocked with a variety of cheeses. The case held an abundance of cheese items under the retailer's Taste of Inspirations premium brand (which took up the better part of one of the four sides) and a hoop Cheddar product under its My Essentials value brand.

Another open refrigerated case sits perpendicular to the service deli — almost as a continuation of that service deli case — and holds an assortment of packaged entrées and side dish items, as well as trayed cheese and meat platters and pegged packaged lunchmeats and cheeses. Here, we found a variety of packaged deli salads, sandwiches, pizzas and pegged premium cheeses under the Food Lion Brand.

During our visit (late afternoon on a Sunday), the store had a steady stream of traffic, but was not crowded. The two cases were well-stocked and neat.

The upside:

■ The store gives an abundance of space to its packaged Food Lion deli salads. The only other brand of packaged deli salads in evidence is Reser's Fine Foods, which gets far fewer facings. And the variety of Food Lion offerings here also is impressive — such as three different styles of potato salad.

■ When it comes to tubbed crumbled cheeses, Food Lion lets its premium Taste of Inspirations brand shine in the case, displaying these products in greater numbers and on a shelf above any branded counterparts.

■ Although all of the pegged premium packaged lunchmeats in the deli department bear the Sara Lee brand, only one of the pegged cheeses is a Sara Lee product. The other SKUs represent the Food Lion brand.

The downside:

■ Many of the shelf tags within Food Lion's deli were extremely small and difficult to read. And some were missing altogether.

■ We didn't see much of an attempt at cross-merchandising (such

as crackers by the cheese or condiments by the sandwiches) within the packaged deli space — for either store brand or national brand items.

Lowes Foods

General observations: The deli department in this Lowes Foods store is located toward the middle of the store, across from the in-store bakery, and is visible upon entry into the store. The area features several refrigerated multi-sided display cases situated close to the service deli — one stationed a few feet in front of the service deli and two others off slightly to the side. One display holds an assortment of packaged salads under the Reser's Fine Foods brand, an assortment of unbranded deli salads, some branded and unbranded lunch-type items and single bottles of Lowes Foods bottled water. Another combines a wide variety of sauces, cheeses, hummus and other grab-and-go items — none of which are Lowes Foods' own brands. Yet another area holds a whole wall of Boar's Head branded items ranging from packaged meats to condiments.

The deli area itself was very appealing, design-wise, featuring a green-and-white striped awning hanging over the main service deli. The area also boasted a prepared meals area where employees were busy prepping and cooking.

Of the three stores we visited, this store had the least amount of traffic (mid-morning on a Monday). The store appeared to be brand new, but when we asked the cashier if it was new, she said it was a decade old — but that it generally didn't get much in the way of traffic outside of rush hour and weekends.

The upside:

■ This store used cross-merchandising as a suggestive selling tool, pairing specific cheeses with complementary wines, for example, and putting pita chips in front of the hummus on display.

■ Of the three stores we visited, this store was the most well-stocked and the neatest in terms of deli displays.

■ Lowes Foods merchandises its own-brand single-serve bottled waters — with large signage promoting the low price — along with lunch-type packaged deli options in one of the display cases.

The downside:

■ Outside of the bottled water products, no products — not even the products prepared in-house — sported the Lowes Foods moniker. With such a wide selection of freshly prepared offerings, the store is missing out on a chance to build brand equity.

Harris Teeter

General observations: The deli department in the Harris Teeter store is situated in the front of the store, immediately to the right as customers walk through the front entrance. In comparison to the other two stores we visited, the department is immense, with numerous refrigerated cases situated next to the service deli (dedicated to meats, entrées, prepared meals, salads, dips and more) and another rectangular case (with three refrigerated sides and one open side dedicated to pizza-making and baking operations) several feet in front of the other cases.

Of the three stores we visited, Harris Teeter had the most foot traffic both inside and outside the deli department (around lunchtime on a Monday). The store also had the most store brand offerings by far — under both the H.T. Traders and Harris Teeter Fresh Foods Market brands.

Despite the heavy foot traffic, the whole area was relatively neat and fully stocked. The area also includes a salad bar and a sushi bar.

The upside:

■ In the front-of-deli display case containing a wide variety of cheeses, Harris Teeter not only includes a sizeable assortment of store brand cheeses, but cross-merchandises these and other cheeses with at least a half dozen SKUs of H.T. Traders crackers on a shelf above the display unit.

■ The refrigerated case closest to the front entrance features an impressive display of Harris Teeter Fresh Foods Market refrigerated soups (including organic varieties), gourmet hummus, pasta, pasta sauces, pickles and more — in many cases, no branded counterpart was evident. And to the right of these products, we found a wide array of single-serve juices, lemonades and teas all under the same store brand.

■ Close to the service deli and next to a Boar's Head display, we found a huge assortment of pegged packaged premium meats and cheese under the Harris Teeter Fresh Foods Market brand. The display dwarfs the Boar's Head display.

■ The store also offered a wide range of "chef-prepared" packaged freshly prepared meals, entrees and side dishes — all sporting the Harris Teeter Fresh Foods Market brand.

■ Promotional signage related to Harris Teeter store brand items was prominent and easy to read.

The downside:

■ We honestly couldn't find a downside. This retailer's store brands are essentially the stars of the deli (and many other areas of the store).

Set the stage

Today's retailers have a real opportunity to steal trips from fast-food and carryout/delivery restaurant operations — and the in-store deli is critical to doing so. They also have an opportunity to build brand equity through thoughtful branding and merchandising of proprietary deli products. But not every retailer is taking full advantage of such opportunities.

"I think retailers tend to be a little bit too conservative when it comes to their own brands, and they don't think out of the box enough," says Jeff Schwartz, private label and retail sales manager for West Liberty, Iowa-based West Liberty Foods.

Bobby D. Ray, vice president, retail and private brands for Ontario, Calif.-based Select Store Brands, adds that most retailers tend to take an "if it ain't broke, don't fix it" attitude.

"Most retailers keep the same old products," he says, "[but] consumers like to see new products."

Hummus, one of the fastest-growing categories in the deli department, represents a great store brand product-development opportunity, Ray adds. New unique flavors "will keep the aisle hot," he contends. And retailers shouldn't stop with hummus — it's also critical that they develop more store brand offerings across the deli and allot more space to them.

On the merchandising front, many retailers could go much further with their cross-merchandising efforts, Schwartz believes. He points to the area of the deli that houses packaged premium lunchmeats and cheeses as one frequently missed opportunity.

"I think that's a huge opportunity, for example, to cross-merchandise their sandwich program," he says. "You've got a customer grabbing a sub sandwich that has, maybe, a sticker for 50 cents off the grab-and-go lunchmeat. It works to build that trial and build that awareness and communicate to people that 'hey, this product is here."'

Retailers could even take it a step further by merchandising own-brand breads and condiments right next to the sandwiches, lunchmeats and cheeses, he adds.

Packaging, too, plays a role in deli merchandising. Ray notes that clear packaging can show off great-looking items.

"If it looks good, we have found consumers will take it home," he says. "Then if it tastes good, they will come back to buy it again."

And retailers might want to rethink the packaging for pegged packaged lunchmeats and cheeses hanging in the deli. Schwartz says the zipper-type packs often fail (and the tubs found in the meat department can be wasteful and let in air). He suggests switching to the peel-and-reseal type of packaging that is formed in line and sports a film top. It uses up to 45 percent less packaging material, too.

"I liken it to the Oreo cookie package where you pull the tab and open the package and then you swipe it close with your hand," he says, adding that West Liberty Foods now offers the packaging for store brand lunchmeats.