-By Meg Major

In the second installment of a continuing series, Progressive Grocer shares insights from a handful of top retail deli/bakery/prepared foods executives who gathered around a table to swap views with, and pick the brains of, fellow panelists about the foremost issues of the day.

Moderated by Progressive Grocer's Executive Editor, Meg Major, and sponsored by Cambridge City, Ind.-based The Really Cool Foods Co., roundtable participants included Tom Clark and Brian Morrison, president and director of perishables and foodservice, respectively, for Basalt, Colo.-based Clark's Market; John Highbaugh, VP of merchandising, Associated Wholesale Grocers, Fort Worth Division; Mike Kemp, director of deli/foodservice, Ball's/Hen House Markets, Kansas City, Mo.; Beth McDonald, co-president, The Really Cool Foods Co.; and Linda Wiggins, VP/director of bakery/deli operations, Brookshire Grocery Co., Tyler, Texas.

MENU PLANNING

Progressive Grocer: Consumers are clearly focused on value, and have in many cases altered their shopping behavior in order to get the most for their money. While it remains to be seen if these changes are temporary or enduring, please discuss what deli/bakery/prepared foods categories have been hardest hit — and most enhanced — during the past year.

Linda Wiggins: The economic downturn has presented us with opportunities that we've not had in the past as a result of people not eating out as much as they used to. The chance to sell some kind of center-of-the-plate protein in the deli has been amazing, and we are finding that our rotisserie program seems to be a category that really continues to grow. We also noticed fairly abruptly that deli and bakery, as a percent of increases over previous years, were so much more than any other department. The gap is now beginning to close and is starting to swing back, but in the thick of the downturn, we saw big increases in deli and bakery.

Brian Morrison: We saw two sides of it. Our hot deli lunch business has tapered off with our 'construction crowd' that’s struggling right now as a result of a slowdown in new housing and commercial development. But being in resort areas, we also have the high-end clientele that's still spending. So, even though they are not eating out as much, they're still treating themselves and not really cutting back on their at-home eating expenses. They may not be going out for $500 dinners, but they are still buying $500 worth of groceries.

Mike Kemp: From the standpoint of prepared foods, we haven't seen a huge, immediate jump. Last year was a good year, but I don't accept same-store sales not being ahead; it's just the way we’ve always felt. Bakery sales have definitely been good. People continue to treat themselves in bakery across the board with breads and desserts. Being a small company, we probably do things a little different from the big guys. In our perishable departments, we measure department sales every week by using an 'all-star list.' For example, our bakery departments were on the all-star list, which means they've beaten previous years' sales 45 weeks out of 52. So, clearly, we've done pretty well this year with bakery sales, but it hasn't been as noticeably strong on the deli side.

PG:  Can you elaborate on that last point a bit more, Mike?

Kemp: As long as you showed up, [strong] deli category sales were a given. But it seems consumers have cut back and are really seeking value right now, but the time issue is still so very important for customers as well. But what's so interesting about the value issue is how well our CSA [community-supported agriculture] program has been received by customers in our Hen House stores. We sell annual CSA memberships to customers for $25, which entitles them to get a cookbook, a T-shirt, reusable grocery bags and $25 worth of locally grown produce for approximately 20 weeks. We've been doing this for the past four years, and this year has been the most successful so far. In times like these, it's so interesting to see how willing people are to step up and be a part of something like our CSA program. While our higher-end stores are feeling the pinch somewhat more, it doesn't seem like the cost/value equation is a deterrent. Instead, they are anxious to support it.

PG:  From a menu and ingredient standpoint, what are the most significant trends that you see as being most important?

Beth McDonald: We've seen a shift to made with organic ingredients, but again, it really comes back to price and value. The organic shopper is still an organic shopper, to the best of their ability. Regardless of the economy, organic consumers still want that choice, and we have a lot more label readers today who want specific ingredient choices. The difference is a very small percentage on the ingredient deck, but it makes a pretty significant impact in the price/value equation.

John Highbaugh: Because of the predominantly large Hispanic customer base in Texas, we are working to enhance our foodservice menu accordingly, because it's a totally different menu that shifts dramatically.

Wiggins: We've been working on our Hispanic menu for some time, and I think one of the things you must be careful about is the need to add in new items incrementally rather than too abruptly, which we have done in the past and failed terribly at. Now, we are adding in new items more deliberately.

Highbaugh: The biggest thing I've seen of late with prepared foods is the need to tailor menus based on neighborhood marketing, because of the diversity of needs of customers in individual stores. That's why I've not been a big fan of commissaries. An average store might have 100 items, but every store would likely need to carry at least 20 different items. And I think it's one of the biggest challenges with foodservice — customers have different needs and different tastes, even in two stores that are two miles apart — and I believe it's essential to address it accordingly with in-store production and/or vendor support with different items. Most consumers don't shop multiple stores for prepared foods in the same way they might for traditional grocery shopping, but a customized prepared foods lineup is something that creates strong differentiation within that particular store and can solidify strong loyalty.

Morrison: With the range of diverse customers in both our higher-end and country stores, we watch this very closely. Items like Parma prosciutto, imported meats and the more gourmet and upscale foods are struggling much more in our country stores, where we have more Middle American customers that are watching their dollars more closely. Conversely, it's not the same with our stores in Aspen and Telluride, where those same categories remain very strong.

Tom Clark: We are responding to the changing needs of our customers with a greater emphasis on meal solutions, which is where we see the future of our business. With our next remodel, which began in October, we are cutting back in center store by basically reducing an entire aisle to expand the perimeter of the store to handle more perishables and meal solutions.

SAMPLING/DEMOS

PG:  Please discuss how promotions and sampling programs are being employed in your deli/bakery/prepared foods departments.

Wiggins: We are really working hard to refine our demo and product sampling strategy by improving customer interaction. In addition to studying other companies' training programs and approaches, we are also incorporating knowledge-based training to ensure that our associates are very knowledgeable about specific products and attributes. We don't just want to put a tray out there; we want educated representatives that are very competent in suggestive selling for meal planning. In the bakery, we're trying to focus on fresh-baked items. We had gotten away from that through the years, but we're really getting back into fresh breads in a big way. On the deli side, we're improving our focus on cheese by encouraging associates to taste all the cheeses so they know the differences between them and what they're all about.

McDonald: We are getting requests to provide help with training and product and nutritional information, along with other helpful benefits about our products that customers would be interested in knowing about.

Morrison: We try to work as closely with our vendors for our sampling program to help make it [as] successful as is possible. Being a small independent, we don't have a lot of resources to feed the public, so we really appreciate vendor support.

Kemp: We have an in-house sampling/demo team that we began about five years ago, and, yes, it is all about knowledge and expertise vs. mass demos. With cheese, for instance, we provide extensive education for associates, who can in turn impart knowledge to customers by talking and drawing them out, and asking for the sale, which we sometimes want to tiptoe around. Asking for the sale is just as important as anything when conducting demos.

Morrison: Merchandising with demos is just so important. It drives me crazy when I see our managers putting out the last tray of cookies in an effort to manage shrink and then there's none left to sell. It's so important to have the products available in the case that you're sampling displayed in close proximity to the station.

Clark: I agree. It's no longer just enough to show up, especially in deli, bakery and produce, where it's crucial that associates learn how to sell and deliver an experience for the customer that goes beyond merely setting the product out and going about their business. Today's shoppers want to know about a product, where it came from, what makes it special.

Morrison: We expect everyone in the store to learn at least a little bit about a product, and are working toward that goal from our central office through our department heads, to filter down those expectations with weekly conference calls to discuss specific products.

Wiggins: We're doing much the same thing on a larger scale, by encouraging associates to not only taste products, but also fill out a tasting journal, where they are asked to form and share their opinions. It's a work in progress, but we are aiming to build our merchandising plans around it, with an end goal of having everyone be part of the process.