Supermarket delis aren't top-of-mind with consumers when it comes to their sandwich programs.
Marketing can make the difference. It can, at the very least, make the consumer aware the supermarket deli is an option for buying a sandwich, said Rosita Thomas, president, Thomas Opinion Research, Manassas, Va., who conducted exclusive research for Madison, Wis.-based International Dairy-Deli-Bakery Association. She based her conclusions on interviews with more than 1,000 consumers and a number of retailers.
"Supermarkets need to reach out to consumers to get deli sandwiches on their radar," she said. "Look at the percentage of consumers who said they buy sandwiches at sub shops, and why they're buying them there."
One of the study's major findings was that 88% of consumers surveyed said they buy sandwiches at fast-food outlets; 85% at sub sandwich shops; and only 48% at supermarket delis. More than 50% never buy sandwiches from supermarket delis and, what's more, only 5% of the total surveyed said their supermarket deli would be their first choice as a place to purchase a sandwich.
The supermarket is providing only a tiny share of the 45 billion sandwiches consumers eat in a year. That's particularly unfortunate because, according to the study, sandwiches are a product providing retailers with a fairly high gross margin -- an average of 54%. Freshness, or the perception of freshness, is very important to consumers buying sandwiches, the study showed. Indeed, 89% of respondents said a made-to-order option is important when deciding where to buy a sandwich, and 66% said freshness "influences their sandwich purchases a great deal." Since many supermarkets already have a good sandwich program in place, with many offering made-to-order creations, it seems that marketing is the missing piece, Thomas said.
Taste and quality were the top reasons consumers buy sandwiches at sub shops. In fact, 39% said taste was the reason; 20% said quality; and 20% said convenience.
Additionally, a full 89% said custom, made-to-order is important to them when they decide to buy a sandwich, and 74% said the last sandwich they bought was made in that manner. The figure was even higher for the youngest and the oldest groups, 77% and 79%, respectively.
"Remember, baby boomers -- the 45-to-64-year-old group -- are an increasingly big part of the population," Thomas said, adding statistics show the 45 to 64-year-old group will grow about 30% in the next decade. "They want food fast, but not fast food. Service has to be quick, but the sandwiches also have to be fresh and tasty."
She theorized that sub shops and made-at-home sandwiches represent the supermarkets' strongest competition. Fast-food outlets' statistics are not as relevant because nearly half the sandwiches purchased there are hamburgers and cheeseburgers, which wouldn't be feasible products for many retailers to offer, she said.
Thomas urged retailers to tell customers they offer the freshness, the quality, the value and even the convenience that sub shops and other outlets offer. If they don't, they'll continue to lose sandwich business to other venues because consumers will continue to think of them first, Thomas said.
"It's significant that 24% of consumers surveyed said they don't know why they don't buy sandwiches at their supermarket deli, and an additional 9% said they never thought of it -- that they go to the supermarket for groceries only," Thomas said.
That makes a full third of respondents for whom the supermarket deli is not even a consideration. Of those who do consider the supermarket, 14% said they feel supermarket deli sandwiches are not made fresh or that they don't like prewrapped sandwiches. In fact, in another part of the survey, 89% assigned importance to made-to-order. To 44%, that's very important; to 45%, somewhat important.
Those figures are borne out in success stories like that of Panera Bread Co., which offers made-to-order sandwiches with premium meats and cheeses on a large variety of freshly baked breads, with a choice of interesting sauces and spreads. Panera saw 50% annual sales growth from 2001 to 2002, Thomas pointed out.
There are plenty of venues, including casual-dining restaurants, vying for sandwich customers, but what about made-at-home sandwiches? While the average number of sandwiches eaten each week by each consumer is 4.1, only 2.8 of those sandwiches are purchased. Thomas urged retailers to tackle the remaining segment with their marketing efforts.
"[Made-at-home] is the one that supermarket operators placed at the bottom of their lists of potential competitors, and I think that's where the bigger potential lies," she said. "I'd suggest they get a focus group of moms and dads together to find out why they're not buying sandwiches for their children's lunches. Why do they prefer to make them at home when they can buy a high-quality, reasonably priced sandwich? Finding out when and why they're making sandwiches at home is key to more sales."
To further promote the freshness of their sandwiches, Thomas suggested retailers, even if they offer only prewrapped sandwiches, should alert customers -- with attractive signage and ads -- that their sandwiches are made fresh in the morning, or several times a day, if that's the case. Moving a self-service case or a sandwich station to the front of the store, too, would address consumers' quest for convenience, she said.
There's tremendous, untapped potential, and an opportunity to offer something a little different, the study showed.
"To me, if one thing stood out above all others in this survey, it was how excited consumers are about the sandwich category. I'm amazed at how they talked about unique breads and fillings and peppery sauces. Bland is out, and flavorful is in. Today's consumers are adventurous. There's no doubt the time is right [for retailers] to jump on the sandwich bandwagon," Thomas told SN.
Customers' willingness to try new things was covered in Thomas' report. So were sandwich varieties, sales at different venues, pricing, marketing efforts, the consumer's decision-making process, characteristics of retailers' sandwich programs, packaging, shelf life and even sources for sandwich ingredients. Thomas supplemented the extensive data that she collected with research from NPD's CREST consumer panel that incorporates yearly data from 2001 and 2002.
IDDBA has published the complete sandwich study, with all survey data, charts and tables. For ordering information, call Jeremy Johnson at IDDBA, at (608) 238-7908.