Tearing Down Departmental Walls… With Produce

The advent of increased produce usage in the deli is a simple phenomenon. As culinary trends have moved to incorporate a broader range of fresh fruits and vegetables, and as retailing trends have led to expanded prepared foods and restaurant-like dining options in supermarkets, delis are simply using more fresh produce. These new realities include the use of larger volumes of produce and specialized products that are not typically sold at retail — such as single-leaf Romaine lettuce perfect for sandwiches — and so dictate changes in procurement practices.

It wasn’t all that long ago when supermarket delis, which mostly used a little bell pepper for garnish, had a very sophisticated “procurement system” for produce: The deli manager would wait until the night crew came on and send the deli clerk to go steal it from the produce cooler. The free produce boosted the deli budget and avoided the difficulties involved in interdepartmental transfers. Now, most delis purchase major items directly and, indeed, it is foodservice suppliers, such as Sysco and US Foods, that are increasingly supplying supermarket delis.

Supermarket executives still struggle to find a business model that conforms to the way people shop and eat today. We’ve known for a long time the silo-like structure supermarkets are built around, with separate profit centers for different departments, is not really in line with consumer habits. It was 20 years ago the Food Marketing Institute (FMI) held its first Meal Solutions event in Phoenix. The event was dedicated to the notion that supermarkets could best serve their customers by focusing on offering “meal solutions,” regardless of departmental structure.

It was one of those ideas that was absolutely true, made perfect sense, but flopped because meal solution buyers are few and far between, while produce buyers, deli buyers, meat buyers, bakery buyers are abundant. When you read the article, Powerful Opportunities For Fresh Produce In The Deli, on page 22, you will read of heroes of cross-merchandising — people such as Paul Kneeland, who has a long history, first with Roche Bros in Boston, then King’s in New Jersey and now with Ahold’s Fresh Formats division.

Paul has always loved to cross-merchandise cheese and proteins and beverages and bakery items in produce. But when he talks about simple things such as cross-merchandising rotisserie chicken and bagged salads, it is good to remember that in almost all supermarkets in America, this seemingly tiny combination involves either deep interdepartmental negotiations or one department head voluntarily giving up space to sell the product for which another department will get credit.

This is hardly a process likely to lead to product displays optimal for consumer needs – or for maximum sales levels.

Many items that were formerly under the produce domain – such as salad bars — have made the migration to deli management. This is typically wise. Delis are more culturally attuned to food safety processes in store, and many a produce clerk is selected more for an ability to lug crates than finesse fresh-cuts on a salad bar. It is also true, however, those supermarket executives are increasingly looking for in-store prepared food operations as an outlet for what would otherwise be shrink from produce. Making things in store, such as guacamole from soft avocados, can combine the store’s operational need to reduce shrink with the consumers’ desire for product freshly made.

There are always complications though. It is one thing to use tomatoes that are getting soft to create salsa, but another entirely to use a damaged product that might pose food safety issues. Indeed, even where the produce is perfect, in-store preparation never reaches the food safety standards of a professional fresh-cut operation. And even though cooking produce provides a “kill-step” in food safety, ensuring the product is properly cooked — meaning to the right temperature for the right period of time — that is a challenge unto itself. So while the risks of selling the salvaged product that has never been cooked are something supermarket executives may want to be cognizant of and, indeed, elect to avoid, if the product is properly cooked, shrink reduction is a goal compatible with food safety concerns.

The fact that more produce will be and must be sold in the ready-to-heat and ready-to-eat offerings of supermarkets is clear; likewise, the fact that the expanded deli/foodservice operations of supermarkets are the likely place for much of this growth is also certain. But much of the potential depends on breaking down walls between departments and offering consumers the meals — rather than ingredients — they want. Deli directors can push hard in this direction, but it is supermarket chief executives who have the authority to break down these walls and put the focus solely on delighting consumers.

It is a big challenge, but if we are really going to align our retail operations with consumer habits, these departmental walls must come tumbling down.