You are here
As part of
PG: If traditional grocers are intent on taking full advantage of the economic shifts that are currently unfolding, then a large percentage apparently need to rethink their deli/prepared foods operations to bring some of the same benefits and conveniences that consumers are accustomed to experiencing with restaurants. As such, what are the factors you're using to determine suppliers/facilities to meet your production needs with a focus on maximizing shelf life and minimizing shrink?
Gaddy: We try to base it on the neighborhood. We use a lot of syndicated data. We do a lot of customer intercepts in some of our stores to find out what they would like to add. But it's amazing, when you go from one area to the next, you see the same comments and the same item requests in various demographics. But we still try to tailor it to specific neighborhood.
In Miami, for instance, we use a lot of local DSD vendors for bakery products, and we do a different program in Hispanic hot foods. It's all from scratch. We have people in those departments that have been with us on a long-term basis, and they do a phenomenal job. In our New Orleans market, we use a local restaurant supplier, again DSD, which does a lot of Creole product for us and delivers directly to our stores, but not all stores. We carefully segment them and decide which stores need these options, and which we don't think will do as well.
PG: That's very interesting, Nancy. Could you elaborate a bit on sourcing bakery products in the Miami market?
Gaddy: It's Hispanic, but it's not Mexican. It's Spanish-influenced, which is a totally different customer than Mexican-Hispanic. We have a company from South America that supplies all of our in-store baked pastries for those Hispanic stores. It's a kiosk that bakes right there in the store every day. We do a nice job with that. It's the products that people from Brazil would be buying in their local neighborhoods, and over here in the States, and a lot of them travel back and forth quite frequently and know they can get that product in their local Winn-Dixie.
PG: As retailers move toward more component-type products and programs, they will have to contend with some of the same considerations as manufacturers, correct?
Dobis: Definitely. We are a small-batch facility that uses many different components that go into other finished goods. When we look at our business, we know we have to deliver a product that looks like it was made in the back room. We have to work closely with our packaging teams to determine what we can do well within our capabilities. But from a product safety standpoint, we feel good about what we deliver, which in many cases is components, which allows the retailer to deliver the safest quality product possible. We want to sell a finished packaged good, but if that's not the right thing to do, we have to adjust our processes and work with the retailers. As a smaller company, we can do that.
Merritt: Our setup is somewhat different, since we have restaurants. We cut most of our vegetables and fruit in-house. We are the largest buyer of Amish produce in the state of Ohio; we purchase a lot of our produce from the auctions, and it goes directly on our trucks. It could have been picked that morning, and we are cutting it later that day.
Beyond the freshness, buying local produce is a sustainability issue for us as well, since we are trying to save reduce our transportation costs. But when processing in-house, you really need to be in control of what is going on, especially when you're dealing with products like melons. We have a food technologist in the field and a sanitarian to ensure we keep safe levels for food safety. In the central kitchen, we have a veggie room, and all they are doing is veggies. We also have a station for the Ohio Department of Agriculture, which monitors our operations inside of our central kitchen.
PG: "Know thyself" seem to be the operative words in strategizing for next-generation fresh meals programs.
Buck: I think there are two main platforms emerging: a ready-to-eat platform, and the ready-to-assemble platform. We are addressing those separately in our stores, and the one I am most interested in is the ready-to-assemble side of things. Here we are, with grocery stores housing up to 40,000 different items, but if I want to make Hamburger Helper, I have to go to the Hamburger Helper aisle to find the kit, and then go to the meat department to buy the ground beef, and so forth.
We need to pull it together to make it easy for consumers to prepare quick and easy meals at home, which goes back to the meal assembly discussion. Consumers could come make a meal in the store, bring it home and have a quick meal solution ready to go. Think about something as simple as chicken Alfredo, and how easy that would be to make at home if we put the sauce and the pasta and the chicken and the salad and the salad dressing all in a spot where people could grab it.
PG: What is the lag point? Why have we not gotten any further along this continuum than where we are?
Dobis: Many retailers work in silos. Do you see that eventually coming together?
Buck: It comes down to better managing the problem. It's going to take somebody to stand up and say, "We recognize there's a problem, and we need to adjust the P&L to find a way to support it."
Tilden: Agreed: it all comes down to the P&L. We are our own worst enemy.
Gaddy: Going back to the meal assembly discussion, one piece we are not talking about is that it's a social event. I can call a few of my friends and do something that I don't have time to do on a regular basis at home[m]prepare a lot of meals at one time[m]and enjoy the experience. It was fun; I get to spent time with my friends[m]and it's easy, there's no cleanup and no shopping lists. It's taking something many people can't or don't want to do and putting a different spin on it, which I think explains its popularity.
In my neighborhood, three meal assembly businesses [have opened] up in the last year, and they have always been busy. At first they were only doing the assemble-it-yourself stuff. Now it's so popular there are frozen sections in the stores, where you walk in any time of the day and grab a couple of pieces for your meal-to-go.
Inabinett: The meal assembly business is actually a third segment of what we're talking about vs. Mike's original points, one of which would bring all of the stuff folks want for quick meals together in a meal center in-store, that groups everything needed to make meals in 30 minutes. You grab it and make it at home, or you have the option of going to the deli or the chef's case, or also from the grab-and-go options from the hot foods bar.
PG: The meal assembly business is something you, at Piggly Wiggly Carolina Co., know a little something about, Craig.
Inabinett: Yes, in early 2007, we entered into a licensing agreement with Dream Dinners, and we now have two stores that run them as a separate business. Most of the product comes in prepped and it ships through Sysco, so it's relatively easy to set it up and maintain your temperatures like we do in the rest of our perishable departments.
Gaddy: I think there is another piece here, too; we've been conditioned over the years to think in silos. But this is not just about deli foodservice[m]it's about the total store, and many of its components. I pick up my salad items from the produce department; then I go to the deli for lunch food, and the meat department for proteins or value-added products, and then to the bakery for desserts, and pick up other things from the center store and frozen foods.
Buck: Why can we not bring that all together? The P&L is going to be stuff to adjust, but we are going to push it[m]we have 60 stores piloting concepts like these. It's very successful, but it's not been easy. Operationally it's difficult. But we recognize that is what the customer is asking for, so we are determined to find a way to do it.
PG: To Nancy's point, while meal assembly franchises are doing well in Jacksonville, there are other marketplaces where the owners are reportedly disappointed because of unmet expectations. Nevertheless, based on all that we're discussing here, it's obvious it's a concept that has legs, and the consumer base is clearly poised for that kind of solution to make its way into the supermarket long-term.
Buck: Yes, it's a concept that really makes a lot of sense to pursue.
Merritt: We have cooking schools in almost all of our stores, and we also do such things as wine and cheese tastings every weekend in our stores. We are working on adding the ready-to-assemble meals concept to our cooking school, so customers can make a bunch of meals with the help of one of our chefs and leave with ready-to-go meals for the whole week.