NEW DELI

LYNNE MILLER

Retailers are taking a fresh look at their delis and implementing comprehensive overhauls that seek to capture new shoppers -- and recapture the department's destination status. The changes have been evolving more quickly as operators seek to balance tradition with new consumer needs.

In the process, operators have created a retail umbrella that encompasses both traditional deli and newer food-service elements, industry observers told SN. The reinvestment is timely, as consumers these days are likely to skip restaurants in favor of eating and entertaining at home, but at the same time, seek fast and healthy meals, they said.

"A lot of supermarkets are finally realizing if they want to compete for customers who want grab-and-go solutions, they need to step up to the plate or those dollars will be lost," said Jim Frackenpohl, a consultant with Retail Food Design, Rochester, N.Y.

At grand reopening ceremonies in January, Lund Food Holdings, Edina, Minn., raised the curtain at three newly remodeled Byerly's stores in Minnesota's Twin Cities. Newly designed delis are a focal point at each store. Restaurant-quality recipes for prepared dishes are as much a part of the makeover as the new infrastructure. The stores stayed open during 10 months of extensive remodeling -- walls were moved; new windows added; cases, flooring, lighting and signage replaced; and, in some cases, the plumbing was rerouted.

Illuminated with halogen lights and done up in earth tones that don't compete with the food for attention, the delis feature olive bars, grab-and-go green salads, grab-and-go sandwiches, a prepared foods department staffed with chefs, and specialty cheese cases with specialists.

"We wanted to refocus our deli business from the traditional grocery-store deli to a specialty deli that happens to be in a grocery store," said Jennifer Panchenko, director of deli operations for Lund, which operates 20 stores. "It's all about great quality fresh foods. It's all about giving customers education and solutions for whatever their entertaining or food needs are."

Last year, the upscale chain rolled out a full-service soup-and-sandwich bar at a remodeled Byerly's, with hot and cold sandwiches and soups are on the menu every day. Since its launch, the concept has been extended to three other stores.

"Our sales and profitability prove it's very successful," Panchenko said, noting 60% of the lunchtime customers eat in, while the evening crowd is made up almost exclusively of takeout customers.

"We have people who come here twice a day for lunch and dinner," she said. "We're a restaurant on the go. We want to be about great restaurant-quality food."

The new delis doubled the selection of cheeses -- they stock more than 750 varieties from around the world. Specialists are on duty to answer consumers' questions and actively sell product. The specialty cheese-service case includes delicacies like caviar, pates and foie gras.

"It's like a little specialty food shop in the middle of our deli," Panchenko said. "We now have the opportunity to sell a lot more unique and specialty cheeses than we did before."

Officials are planning to use similar concepts when they remodel the delis at three additional stores, Panchenko said.

When they cooked up the master plan for the deli, company officials traveled to New York City and scoured more than 30 innovative restaurants and specialty markets for fresh ideas. They patterned the grab-and-go sandwich program after Pret A Manger, the McDonald's-owned, British sandwich-shop chain with a handful of units in Manhattan. Borrowing concepts from restaurants is a time-honored technique for supermarkets, who often turn to restaurants for ideas and inspiration. But the source of inspiration doesn't have to be upscale.

Food-industry sources who talked to SN gave credit to Subway, the quick-service restaurant chain, for creating the model that many supermarket deli managers are looking to for ideas.

"They're a good model, one of many good models," said Howard Solganik, a consultant with Solganik & Associates, Dayton, Ohio.

Price Chopper Supermarkets, Schenectady, N.Y., is one of several retailers to launch a deli-sandwich program, dubbed Delirobics, that's aimed at consumers counting their calories. In store circulars, the chain acknowledges Subway with this line: "You don't have to take a subway to lose a belt size!" Weis Markets, Sunbury, Pa., and Morton Williams Associated Stores, Bronx, N.Y., have adopted the program, too.

With its selection of low-fat sandwiches -- and aggressive marketing -- Subway helped change the traditional, unhealthy image of deli sandwiches, another food-industry consultant observed. Subway scored a major marketing coup when it promoted its quick-to-make, healthy sandwiches -- and even had a store associate show off his slimmed-down physique in TV ads. The ads "really stuck in so many people's minds," said Frackenpohl. "I give credit to Subway."

That Subway recently surpassed McDonald's in the number of operating units could be viewed as a sign of America's changing preferences. At the end of 2001, there were 13,247 Subway restaurants operating in the United States, compared to 13,099 McDonald's restaurants, the submarine sandwich chain noted.

"That's pretty dramatic," said Mona Doyle, president of the Consumer Network, Philadelphia. "You have people opting for what appears to be fresher, healthier products. It's not that people don't want fast and convenient and one-handed. Sandwiches do that. But they have nostalgia. They've been around forever."

The concept is not new -- supermarkets have sold prepackaged sandwiches for years. Industry watchers give stores credit for doing a fair job with prepackaged items.

"Premade sandwiches are a big plus," Solganik said. "Sandwiches have been -- and should be -- a greater part of what supermarkets do."

Yet many supermarkets don't go far enough to bundle the pieces together, Doyle and Frackenpohl said.

"If you look at most delis, they have all the pieces of the puzzle," said Frackenpohl, who formerly was a chef at Wegmans, Rochester, N.Y. "When you come to the deli counter, you want a total meal. You don't want to have to buy a half pound of something, a roll, a half pound of a salad. What needs to happen is they need to provide more than one option."

Doyle identified two problems -- the supermarket deli and bakery are often far apart in stores, and supermarket delis don't deliver quick service.

In Florida recently, Doyle visited units of two major chains. Associates in the delis were hard to find late in the morning, she said.

"A lot of them do a good job with premade subs and hoagies," Doyle said. "Will they ever have enough help to make sandwiches in a timely fashion? That's another question. The c-stores still outdo them. I still think consumers see supermarkets as slower than other [sandwich] sources."

Some chains are trying to change that image. As part of the ongoing remodeling of the company's stores, Sunbury, Pa.-based Weis Markets installs express checkouts in the expanded delis, which now have pizza kitchens, an increased assortment of heat-and-serve meals, and the Delirobics sandwich program.

Separate checkouts make shopping more convenient for consumers who simply want to pick up something for dinner. They're part of the floor plan in Giant Eagle's delis. "They're very successful," said Laura Karet, senior vice president of marketing for the Pittsburgh-based independent.

The delis at Giant Eagle's 210 stores in Pennsylvania, Ohio, West Virginia and Maryland have been destinations for decades. A few years ago, the chain rebranded the delis to create "a store within a store," Karet said. New fixtures, lighting, flooring, signage and packaging created a distinctive look for "The Famous Deli," as the department is known. For many supermarket chains, branded deli meats, as well as private-label products, present an opportunity to convey a quality image of the deli. When launching the new lines, retailers tout the quality as well as the health attributes of the meats.

Byerly's last summer launched two new lines of high-quality deli meats. Copperfield is the company's exclusive supplier of all-natural, no-water-added deli meats, and the retailer positions the meats like a private-label brand at all 20 stores in the chain -- "it's our opening price point," Panchenko said. At the same time, Byerly's rolled out Boar's Head meats at four stores. Well-known as a premium brand on the East Coast, Boar's Head represents the top tier for Byerly's.

"We'll continue to add it to more stores," Panchenko said.

Giant Eagle is the exclusive purveyor of the Philadelphia-based Dietz & Watson line of slicing meats. The typical Giant Eagle store carries 20 varieties of the line, Karet said. "It's a very high-quality brand," Karet said. "We have very loyal customers through that brand."

Elsewhere, Winn-Dixie launched a private-label line, Ridgmoor Provisions, for its deli case, positionaing the products as a premium item. In ads, the Jacksonville, Fla.-based retailer noted the meats and cheese are lower in fat than competing brands, contain no allergens (including MSG) and are free of binders, fillers and artificial colors or flavors.