Consumers buying less in deli, prepared foods areas

by Bryan Salvage
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MADISON, WIS. — Many consumers are changing their spending habits because of the changing economy. More than half of the respondents to a recent survey from the International Dairy-Deli-Bakery Association said they are buying less in the deli and prepared food areas.

According to I.D.D.B.A.’s "What’s in Store 2010" trends study, consumers want better deals and more "bang for their buck." Although nearly one in five in-store delis have experienced a drop in gross income over the past year, four in five are still holding strong. Trends in thriving delis include meal deals, cross merchandising, a return to traditional comfort foods and ethnic food offerings matching local demographics.

Qualities consumers value most in the deli and prepared foods departments include taste, price/value, freshness, cleanliness and quality of deli items, I.D.D.B.A. relays. Fewer consumers put a high value on organic, local and imported designations than they did during the economic boom, and brand loyalty has weakened, the study states. Consumers are now looking for value. "The price per pound of deli items has increased too much, so I look for sales," one shopper said.

Shoppers that are less value-conscious, however, remain attracted by healthful prepared-foods programs, and many of them have increased purchases of supermarket ready-to-eat and heat-and-serve meals.

Most consumers are reducing restaurant spending without increasing deli-meal purchases. Roughly 50% of Americans bought meals at the in-store deli less often over the last year, with one-third of those doing so "much less often," according to I.D.D.B.A. Many shoppers say they are "more concerned about price than time right now." In the future, retailers will turn to more pricing tactics, promotion, menu composition and in-store aesthetics, the association predicts.

Consumers are seeking consistency in other areas of their lives, including buying comfort foods — which has manifested itself in a demand for iconic deli foods. They’re also experimenting with trendier versions of the classics that feature specialty potatoes or spicy sauces. Fried chicken meal deals, among other items, are strong players in the comfort category.

Premium and imported deli meats were "the next big thing" before the financial bust. Now, consumers are scaling back, looking to get more protein per penny. They are opting for prepackaged meats over sliced-to-order meats from the service deli. According to one consumer, "Although the deli items are fresh and much healthier, it is not as cost-effective as purchasing the pre-packaged items."

As a result, manufacturers are trying to get consumers to think about the overall value proposition of different deli meats. Consumers may be willing to pay a little more for meats they believe are better for them — perhaps because of reduced sodium, added ingredients like olive oil or natural processing methods.

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