How Digital Saved the Deli

While the pandemic has sparked tremendous change in grocery, survival of the supermarket deli required retailers to shift gears at lightning speed—driving the deli online. But as scores of new users discover the convenience of online ordering, curbside pickup and delivery, the digital deli is likely here to stay.

To facilitate the rapid move from in-store ordering and takeout to online ordering and delivery, a growing number of grocers have partnered with third-party providers such as Instacart, DoorDash and Shipt.

Earlier this year, Hy-Vee Inc. launched its curbside meals-to-go online at more than 200 locations companywide. The West Des Moines, Iowa-based grocer’s Mealtime To Go offerings include hot prepared foods along with take-and-bake meals. The meals were initially available for free pickup in as little as 30 minutes. Customers could also schedule the meals for a future pickup time. But as demand soared, so too did the need for reinforcements.

“We launched the Hy-Vee Mealtime To Go program in early April using a preexisting platform within our systems,” says Angela Waltz, group VP of restaurant development for Hy-Vee. “Since the launch, we’ve leveraged our partnership with DoorDash to improve the experience of online ordering for our customers and for our employees at the stores fulfilling the orders.” 

Hy-Vee says its most popular Mealtime To Go items have hailed from its Asian department, but customers can order everything from breakfast to sandwiches as well meals for the whole family through the company’s website or via Hy-Vee’s Aisles Online app.

To keep its menu fresh and its customers engaged, Hy-Vee adds new heat-and-serve Family Meals every two months and rotates its hot-and-ready Meal Deals on a monthly basis. As new products launch within its foodservice departments, Hy-Vee also makes them available online.

“Mealtime To Go has become a very popular method for Hy-Vee customers to order prepared food items. The number of users continues to increase, including a large number of new users each week and positive numbers as it relates to repeat users,” adds Waltz. “We do expect the program to remain strong post-COVID. Online ordering and food delivery is a trend that we think will only continue to grow.”

Restaurant-Quality Delivered

As a result of the pandemic, consumers are eating more meals at home and feeding more people at home. According to the Pew Research Center in Washington, D.C., a majority of young adults (18- to 29-year-olds) in the U.S. live with one or both of their parents for the first time since the Great Depression.

Grocers like The Fresh Market offer the new at-home extended family a full menu of solutions when they want to take a break from the kitchen, including Ultimate Dinner Meals, Little Big Meals and value-priced and holiday selections. The meals can be ordered through The Fresh Market website and its mobile app.

“With consumers cooking at home more, The Fresh Market has become a destination for our guests to buy restaurant-quality meals that are easy to prepare with minimal prep time,” says Kevin Miller, chief marketing officer for The Fresh Market.

Photograph courtesy of the Fresh Market

While the Greensboro, N.C.-based grocer has long offered its weekly Little Big Meals that feed a family of four for $20, as well as its Market Meal Kits that serve two people, it recently expanded its repertoire to include special occasion/holiday meals and the Ultimate Dinner Meal for six people. Its Ultimate Steakhouse Dinner Meal feeds six and retails for $149.99.

“The Fresh Market is able to offer these complete meals at a bundled price that not only is a cost savings for our guests, but also takes the guess work out of meal planning and saves them time shopping and preparing,” Miller explains. “More than the set price, it is the ease of ordering, the prep work is done for you, and many meals only require heating, so it saves time in the kitchen.

“Our meals are affordably priced so that families can eat extraordinary restaurant-quality meals every day without having to break the bank,” he continues. “The response to our meal kits and the pricing has been overwhelmingly positive.”

The Fresh Market offers delivery through Instacart as well as curbside pickup at all of its 159 locations. “This business has increased significantly this year, particularly with guests who have never ordered online before,” says Miller.

Many of the grocer’s meals can only be ordered online (like the Ultimate Dinner Meal), while other meals that were previously only available in-store, such as the Little Big Meal, are now available for purchase online.

An Iconic Sub Moves Online

In January, Publix began offering its fan-favorite Pub Subs through a new digital deli counter via Instacart, enabling same-day delivery of its build-your-own sandwiches throughout Florida. This summer marked the rollout of Instacart Meals with Publix stores across the Southeast.

Publix now offers its popular Pub Subs for same-day delivery via Instacart. Photograph courtesy of Instacart

The partnership aims to make it easy for customers to order specialty deli counter items, like Publix subs, alongside their groceries and household essentials, all to be delivered or picked up from the store. In July, Pub Subs and Instacart Meals became available to nearly all Publix stores across Florida, Georgia, Alabama, South Carolina, Tennessee, North Carolina and Virginia.

“[Retail foodservice] has been an area of focus for the company even prior to COVID, and since then we’ve doubled down because it’s important to our retailers and our customers,” says Instacart President Nilam Ganenthiran. “We have been working with all of our large partners to allow for more and more of their retail foodservice items to come online in a high-quality way, where it’s not just rotisserie chicken but also most of the custom things they sell in a way that works for the retailer’s inventory and the customer in terms of freshness.”

As of July, customers had ordered enough Pub Subs via Instacart to span the length of 758 football fields, reports Instacart, which adds that the item’s popularity also speaks to the ease with which it can be custom ordered online.

“We’re seeing customers responding to online ordering and delivery of retail foodservice products now more than ever,” continues Ganenthiran. “I don’t know if it’s [entirely] COVID-related, as people do eat 21 times a week.”

Last-Mile Competition

The good news for grocers in the third-party delivery game is that they may soon be spoiled for choice. “The more competition there is in last-mile delivery, the better it will be for grocery retailers who, up until this point, have felt their choices were very limited,” says Sylvain Perrier, president and CEO of Mercatus Technologies.

San Francisco-based Instacart, which most recently forged a partnership with 7-Eleven to offer same-day delivery to customers on thousands of convenience, grocery and select prepared foods items, partners with more than 400 national, regional and local retailers, providing consumers across the U.S. and Canada with same-day delivery of deli and prepared foods, groceries and goods from more than 30,000 stores across more than 5,500 cities in North America. 

In August, competitor DoorDash, which started in restaurant food delivery, began also delivering groceries. The grocery service is included on its DashPass, a subscription service that gives members unlimited free delivery and on orders over $12 for $9.99 a month. A recent study from Edison Trends finds that DoorDash led on-demand restaurant food delivery transactions in April with 45% of the market. UberEats was next with 28%, followed by Grubhub and Postmates.

“DoorDash is coming for Instacart and Amazon by launching grocery delivery as it aims to be an all-in-one delivery platform, offering free delivery to DashPass subscribers,” Perrier continues. “Unlike DoorDash, Instacart has been very reluctant to be ‘just a delivery platform’ and instead, puts its brand at the forefront by turning grocers into branded warehouses. On the other hand, DoorDash Drive powers chain stores’ delivery services by selling its back-end platform and letting grocers brand the solution as their own, which could be more appealing for grocers in the long run.”