Retailers See Sharp Declines in Bakery+Deli Sales

Retailers See Sharp Declines in Bakery, Deli Sales: IDDBA

Food retailers’ in-store bakeries and delis experienced a steep drop-off in sales in late March as many supermarkets closed or limited these departments to reduce interaction between workers and shoppers during the coronavirus pandemic, according to a report from International Dairy Deli Bakery Association.

“A lot of retailers closed the full-service counters, the buffets, the ready-to-order items, etc.,” said Anne-Marie Roerink, president of research firm 210 Analytics, in a webinar on the report. “That really impacted deli meat, deli cheese, as well as deli prepared.”

Citing data from IRI, the IDDBA report said deli prepared foods sales were down 37.2 percent for the week of March 29, compared with the comparable period from a year ago, after seeing some sales gains earlier in March as consumers were stocking up. Some categories lost virtually all of their sales volume, such as prepared soups, which were down 93.5 percent as retailers closed down their self-serve soup and salad bars.

Many retailers began offering their prepared foods in refrigerated, grab-and-go formats, but those sales have tapered off as well.

“Now that people are fully stocked at home, we’re actually seeing a little bit of a contraction of trips,” Roerink said.

She noted that consumers were likely shopping multiple stores and making multiple trips during the second and third weeks of March because many items were out of stock.

Consumers also transitioned to buying more prepackaged deli meats and cheeses, although random-weight deli meats and cheese still saw some gains. Dollar sales of random-weight cheese were up 16 percent in the last week of March, compared with a year ago, while fixed-weight cheese sales rose 32.7 percent. Random-weight deli meat sales rose 6.6 percent, while sales of packaged luncheon meat were up 22.3 percent.

“The above-average increase in both packaged luncheon meats and packaged cheese is a sign of increased demand, but also shoppers looking to speed up their store visits,” said Angela Bozo, education director with IDDBA, in the report.

In the service bakery, reduced demand for party items such as cakes and pies took a toll, and, with many bakeries closed, consumers shopped the packaged bakery aisle for staples such as bread and rolls, as well as comfort foods such as cookies and crackers.

In-store bakery sales fell 20.5 percent for the week ended March 29, vs. a year ago, while sales in the bakery aisle rose 15.3 percent.

For the most part, the dairy department continued to perform well throughout March, with sales up more than 60 percent in both the second and third week, compared with a year ago, and still up 22.2 percent in the week ended March 29. Butter, eggs, natural cheese, and processed cheese all saw strong, lasting sales gains, which Roerink attributed in part to more people baking at home.

“Growth would likely have been even higher if it wasn’t for stock-outs and purchase restrictions for items such as eggs and milk,” said Abrielle Backhaus, research coordinator with IDDBA, in the report.

Some of the suggestions Roerink offered for retailers during the webinar:

  • Consider partnering with local restaurants to offer their prepared foods, as some retailers, including H-E-B, have done, which not only helps satisfy demand for ready-to-eat foods but could also earn some goodwill from the community.
  • As more consumers turn to online ordering, retailers might consider reminding consumers that they have deli prepared foods and random-weight deli meats and cheeses available for pickup and/or delivery.
  • Consumers may increasingly seek out comfort foods they can enjoy while they “cocoon” at home, such as cookies, wine, and chocolate, Roerink said, citing observations from grocery stores in China and Europe, where the virus first began spreading.
  • Offer pre-sliced deli meats in single-serve or other small packages, rather than in one-pound packs. Among the shopper feedback cited in the report, as compiled by consumer research firm Retail Feedback Group, was that consumers often shop the deli for sliced-to-order meats because they can’t afford a full pound.
  • Self-ordering deli kiosks should be cleaned frequently, if used at all — Roerink cited indications that consumers are hesitant about using touch screens at this time.

With young children out of school, college students back in the fold, and parents working from home, demand for groceries can be expected to remain high, the IDDBA report concluded. However, sales may be tempered by skyrocketing unemployment and looming economic uncertainty, which could lead consumers to trade down to less expensive items, such as private labels, and hold off on some more expensive purchases. Consumers are also likely to remain wary of crowds in the stores, and will likely try to get through their shopping trips as quickly as possible, if they don’t transition completely to online ordering.

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