Is Your Deli A Must-Visit?

The Specialty Food Association funds an annual consumer survey to “…explore consumption of and attitudes and behaviors toward specialty foods.” This year it discovered only 59 percent of U.S. consumers reported purchasing specialty foods, a huge drop compared to 74 percent of consumers surveyed in 2013. Sacré bleu! Is this signaling some sort of collapse of the American palate? Does it represent a flight to basics caused by economic distress? Perhaps the “local” movement is causing a massive rejection of foreign specialties?

The answer would be no, no and no. In fact, this decline signifies nothing more than the Sisyphean task of the specialty food trade, which continuously promotes specialty items, but then loses credit when the items become best sellers. This year Mintel, which conducts the research on behalf of the Specialty Food Association, redefined specialty foods and, more importantly, changed some of the examples. So Greek yogurt, which was a specialty food, now is a mainstream product.

The inchoate characterization of specialty foods as “foods of premium quality, that are often made by small or local manufacturers, or have ethnic or exotic flavors” inevitably leads to inconsistencies. On the one hand, the field skews toward high-end families with household incomes of more than $75,000, which are far more likely to purchase specialty foods than those with incomes under $25,000. Yet Hispanics – not a high income demographic – are far more likely to buy specialty foods than Whites or Blacks. Of course, to Hispanics, many of the specialty items are mainstream. The whole field is, to quote Winston Churchill in a different context, “A riddle, wrapped in a mystery, inside an enigma.”

You can see the blend of an ethnic demographic with a foodie psychographic in the fact the Pacific Region of the U.S. is more likely to buy specialty foods than any other region in the country. You can also see the experimentalism of youth in the fact that once people get past the economic stringencies of being 18 – 24, the percentage of the age cohort making specialty food purchases peaks between 25 – 34 years of age and declines in each subsequent decade.

For the deli, it is great news cheese is in the top three specialty products, but the important thought-process around specialty foods is not really product-related; it is process-driven. Specifically, it is a rebuttal to what passes for category management in much of the industry.

One way of thinking about specialty foods is that each item is a product passionately important to a small subset of the population. It may be a very expensive bottle of vinegar, important to only the most affluent, or a Hispanic, Asian, Kosher or Halal product, important only to certain religious or ethnic groups. The key is these consumers really value these products — so much so they may alter their choice of shopping venue depending on a store’s willingness to stock these products.

Therein lies a tale — and the story is how dangerous category management can be. If a category manager handles cookies, and if he perceives his charge as being to maximize cookie sales and profits, he will always be inclined to discontinue the exotic Scandinavian biscuit that is the slowest selling cookie and replace it with a 14th place chocolate chip cookie, which may well outsell the Scandinavian treat.

The problem is the Scandinavian specialty cookie is loved by a certain segment of consumers, and if they can’t get it there they will go elsewhere and bring that store their business for expensive salmon, wine and much more. So the challenge is how to instruct and compensate the cookie category manager so he cares about sales of wine.

Indeed in the deli, where so many prepared foods are proprietary, the challenge goes beyond that. The challenge is not just to carry specialties consumers are looking for; the challenge is to consciously develop and promote proprietary prepared food items so consumers will only consider buying them from your banner. In other words, the goal is not just to have a pizza program or sub shop that meets the convenience needs of nearby workers or residents; the goal is to have unique flavor profiles and innovative products so the kids insist on the lasagna from your market.

Easy? No, but Trader Joe’s has specialized in creating not just private label product but product so good that consumers who move away from a Trader Joe’s neighborhood still find ways to get its sauces. Costco has legions of fans that covet its salmon or rotisserie chicken. This is why a “good enough” selection of specialty cheese or prepared foods – never is because it won’t build passionate loyalty.

So the challenge is to use specialty foods to make your market, well, special.