Consumer preferences are changing faster than you can eat a sandwich, and the supermarket fresh deli department where some of those sandwiches are made is undergoing a significant shift as a result.
With food-away-from-home (a.k.a restaurant) prices continuing to outpace grocery prices, more consumers are opting to either make that sandwich themselves — or grab one from their grocer’s deli.
With some 16% of Americans saying they plan to have more meals at home over the next six months, the deli counter is no longer just a pitstop for quick snacks and cold cuts. It has evolved into a destination for ready-to-eat meals and sides as people lean into home cooking and prepared foods bought outside of restaurants to save money.
“Consumer preferences have changed over the past year or two coming out of COVID,” says Dave Thurman, vice president of sales at Advantage Solutions. “People shopping in grocery stores are actively looking for options they can either eat immediately, take home or serve when entertaining.”
Today’s deli customers want a trifecta of freshness, health and convenience — at a lower cost than a restaurant. Which means retailers are faced with deploying the right mix of marketing and merchandising strategies both in-store and online to meet demand, Thurman says.
For instance, pre-COVID most people were used to digital shopping, but not necessarily for fresh food. Shoppers who wanted fresh items from the deli couldn’t find them online because they weren’t there, Thurman says.
But Advantage is dedicated to those perimeter segments of a store — deli, bakery, meat, seafood, produce and dairy. “Using the targeted marketing insights and sales ability we have in those fresh categories, we work with retailers and our clients to make sure that products are available online,” Thurman says. “Then we look strategically at those perimeter departments to determine: How do we turn them into shopper destinations?”
Marketing and merchandising mastery
Advantage, which advises both retailers and product manufacturers, is seeing an uptick in demand from both to make the most out of the deli boom.
Thurman says brand and product manufacturers come to Advantage to gain access to desired retailers when they’re introducing new products into the deli — whether that’s behind the glass or in a floor display — but they often get much more.
Using insights from a cache of up-to-the-minute data on category sales, and by answering questions like: Can that retailer execute an in-store program? Do they have enough labor and/or space? Is the offering best suited for the deli case or a floor display? Advantage can provide the customized retail marketing and merchandising solutions that clients need, Thurman says.
For instance, digital marketing and promotion strategies play a pivotal role in driving deli sales. According to the Advantage 2024 Shopper Outlook, 53% of shoppers use store websites before shopping in-store. That underscores the importance of online visibility, targeted marketing and leveraging social media platforms to showcase products and flavor profiles.
Digital-first marketing and promotional strategies may have first gained prominence in grocery retail during the pandemic, but now customers expect fresh items to be available online, Thurman explains. “The things that influencers talk about on Instagram and TikTok, they all play a very important role in driving promotion.”
Consumer tastes shape in-store strategy and execution
The deli’s continued evolution demands that retailers and brands understand exactly what consumers want and expect. Consider, just a few years ago better-for-you deli options such as plant-based and low-sodium products weren’t nearly as popular as they are now. But that has changed as more manufacturers have developed low-sodium meats and salads that consumers can now find in the deli case.
International flavors were also scarce, but growing interest in diverse culinary experiences spurred retailers to embrace the rich tapestry of global cuisine available to cater to adventurous palates.
“Retailers are trying to provide more diverse offerings, whether it’s behind the glass in deli meats, in prepared foods or in package sizes and price points to accommodate different groups, backgrounds and family styles,” Thurman says.
Taste isn’t the only lever retailers are pulling. Even packaging plays a role in consumers’ increasing interest in deli offerings. There’s a growing preference for sustainability, particularly among Millennial and Gen Z shoppers, and retailers and manufacturers are responding with eco-friendly packaging that demonstrates more responsible consumption.
It’s a lot to take in. But with retail sales slowing and the fight for foot traffic intensifying, both product manufacturers and retailers that are willing to put in the extra work are poised for bigger rewards.
“There is a huge battle going on right now for the food dollar, and manufacturers and retailers are doing everything they can do to be a part of that,” Thurman says.
