Deli and Prepared Produce Combos Continue to Expand

Retailers should cross-merchandise items from various departments and consider easy meal solutions to entice customers.

Offering a fresh experience with none of the fuss or messy associated with peels, seeds or fruit skins, fresh-cut and ready-to-eat fruits and vegetables are now standard in deli and prepared food departments and offerings nationwide. But what is driving this category and where are the opportunities for further growth?

In order to fully understand the key trends that are driving produce merchandising in deli and prepared food areas, Rick Stein, vice president of fresh foods at the Arlington, VA-headquartered FMI-The Food Industry Association, believes it’s necessary to step back and look at how shoppers define value.

“We find shoppers have an expanded definition of value to include price and quality but also experience, relevance and convenience,” he says. “At the same time, shoppers today are focused on ‘eating well,’ which can have various meanings from person to person. As shoppers seek to ‘eat well,’ we find certain purchase drivers, including health, entertainment, enjoyment and convenience, that encourage shoppers to pay a bit more.”

Both the produce and foodservice departments play into these purchase drivers, especially when it comes to health and convenience, Stein says, although he suggests entertainment and enjoyment can also be offered with colorful displays and exciting culinary offerings.

“Food retailers that lean into these purchase drivers as they develop their foodservice strategies are going to win shopper loyalty and be seen as a solution provider for shoppers looking to solve their different eating occasion needs,” he adds.

According to Sharon Olson, executive director of Chicago, IL-based food insight and trend forecaster Culinary Visions, culinary tourism driven by post-pandemic international travel has emerged as a key motivator for many consumers.

“Travelers return home inspired to recreate the flavors they experienced abroad, turning to local supermarkets for authentic ingredients,” she says. “This provides an opportunity for delis to provide international recipes that can be challenging to prepare at home.”

Olson believes produce departments can capitalize on this demand by featuring global staples, like Asian greens, Latin root vegetables, and exotic fruits, to complement the experience.

Another important trend, Olson continues, is seasonal events that explore culinary heritage.

According to Culinary Visions research, 78% of consumers surveyed say they like to share foods that reflect their heritage, and 84% say they like to create their own food traditions when they cook for friends and family.

“Sampling authentic prepared food recipes created by home cooks make it easy for shoppers to bring home a genuine experience,” adds Olson.

MERCHANDISING FRESH

When it comes to merchandising produce in the foodservice department, Stein recommends retailers lean into the colorful, enticing experience produce brings. “The produce department really amplifies the senses visually,” he says. “Produce also has a strong health halo and can be used in the deli and foodservice departments to help amplify the assortment of options that meet shoppers’ health and well-being needs.”

There are also plenty of opportunities for cross-merchandising. With Stein estimating that 54% of shoppers create hybrid meals — a mix of scratch cooking and semi or fully prepared items — he says retailers can pair fruits and vegetables with deli items to offer complete meal solutions for shoppers.

To capitalize on the interest in global flavors, Olson recommends starting with a simple merchandising tactic: a tasting station, featuring mangos and limes alongside a jar of salty, chile lime seasoning or quick recipes showcasing Asian greens with a prepared sauce.

These offerings, she says, encourage shoppers to experiment and build their culinary confidence.

Citing a Culinary Visions study, which showed 80% of consumers would like more information about the sources of the fresh items, Olson recommends adding augmented label technology that enables shoppers to see the story behind a product via point-of-sale touch screens.

“These types of digital displays require a significant investment, yet even without the latest technology, it’s important to make it easy for customers to get the information they want about the source of the ingredients in their meals,” she explains.

THE TASTE IMPERATIVE

A clear area of opportunity, according to Phil Lempert, a food marketing expert and author also known as “The SupermarketGuru,” is both cutting down the number of SKUs retailers carry, while also committing to a renewed focus on fresh.

“A lot of the produce philosophies have gotten lazy,” he argues. “It’s really easy to put up six or seven boxes full of apples, even though they have been in storage for a year and a half.”

Instead, Lempert advocates focusing on produce that’s in season. “If we start merchandising and selling produce that’s in season, the price is going to be lower, the taste is going to be better, and the nutrition is going to be improved.”

Rather than carrying huge numbers of SKUs, Lempert advocates for retailers highlighting “what’s in season and what’s really great.”

This logic applies equally to cut fruit and prepared produce, according to Lempert, who claims that too often retailers focus on convenience to the detriment of taste. “I happen to be a consumer of cut fruit and when I get cantaloupe that’s in season, it’s fabulous,” he says. “When I get cantaloupe that’s out of season, it tastes like Styrofoam.

“We need to put in the produce managers’ heads that it’s all about taste, it’s all about flavor – that’s going to be what gets consumers coming back.”

Another merchandising problem Lempert has identified is packaged produce stock not being rotated on a regular basis. A case in point is packaged salads.

“I’m a consumer of packaged salads, but I’ll go into a store and the packaged salad will have a shelf-life in two days, and I’m not going to consume all of that in two days,” he says. “I don’t think some stores are taking as much care with the merchandising aspect, instead opting for just getting it out there.”

Lempert also recommends making sure packaging types and sizes are appropriate by understanding your consumer base in any given area. “If you’ve got a lot of singles or retirees versus big families, make sure the packaging is appropriate for that customer,” he says.

Maeve Webster, president of Arlington, VT-based food and beverage industry insight provider Menu Matters, believes retailers have an incredible opportunity to offer multi-sensory experiences for consumers that also educate and empower them to make great decisions.

By incorporating more information that goes beyond origin or variety, she says retailers can excite shoppers about the possibilities they can create at home, and to experience food on a more emotional and visceral level.

The departments should work together to help teach consumers not only what’s new and exciting but how to use it, why the retailer decided to offer it, when it’s in season, and what makes it special.

— Maeve Webster, Menu Matters, Arlington, VT

Webster argues consumers are becoming increasingly overwhelmed by the breadth of options they have not only in the produce area but across retail. “In reality, consumers need retailers and suppliers to help them make better decisions and feel more confident in the decisions they are making,” she says.

PACKAGING INNOVATIONS

Shopper demand, according to Stein at the FMI, leans strongly toward foodservice packaging that displays tamper-evidence, is easy to handle, and allows the contents to be viewed. In addition, microwave-safe, added shelf life, and oven or freezer-ready options are also preferred.

“The packaging is really an opportunity to play into both convenience and the expanded definition of value for shoppers,” he adds.

According to Olson, when it comes to packaging, “less is more.” Consumers, she says, want sustainable packaging alternatives when they shop for groceries.

Although some retailers are swapping plastic for more environmentally friendly paper or cardboard, and others are providing more information on how best to use the product and what to pair it with, more innovation is required, according to Webster.

On the flip side, she argues some packaging “goes a bit overboard” with concepts, such as individual apples in beautifully designed boxes.

“I do believe Americans should become more mindful of quality, but that type of excessive packaging flies in the face of environmentally conscious packaging,” she says. “It’s a balance – designing packaging that will help high-quality produce stand out without becoming so excessive that it is as much a deterrent as it is a benefit.”

AVOCADO APPEAL

Avocados currently play a substantial and growing role in deli and prepared food departments, according to Terry Splane, vice president of marketing at the Irvine, CA-headquartered California Avocado Commission.

Their usage, he says, has expanded far beyond the produce aisle, appearing in everything from fresh guacamole to prepared salads, wraps, bowls, and even fried avocado slices at in-store deli cases.

“These are great items for consumers to look for while in store, especially during the California avocado season (April through September), when these locally grown and sustainably farmed flavorful fruits are incorporated into seasonal deli recipes,” says Splane.

At the same time, Splane believes there is significant room to grow avocado usage at in-store deli and prepared food counters through innovative product development and targeted seasonal promotions.

He suggests creating new deli offerings like avocado-based hummus, deviled eggs, or even smoothies to appeal to health-conscious consumers seeking novelty and convenience.

Key seasonal events — such as Labor Day and Fourth of July — which occur during the California avocado season, also offer natural platforms for boosting avocado sales, according to Splane. “Our retailer partners have found that strong coordination between produce and deli departments can ensure optimal supply for fresh-prepared recipes,” he adds.

Such recipes include deli-made guacamole, utilizing avocados that are too ripe for display in produce sections, thus reducing waste while offering a fresh-made product. Retailers, Splane adds, also see increased purchases when cross-merchandising with complementary products, such as chips, tortillas or salad ingredients.

Stephanie Bazan, senior vice president of commercial strategy and execution at Irving, TX-based Avocados From Mexico, recommends leveraging other “fresh” areas in the store to help boost overall avocado sales, highlighting meat and packaged bakery as key areas to expand the avocado category.

Bazan likewise advocates cross-merchandising, suggesting pairing avocados with complementary products, such as tomatoes, onions, cilantro, peppers, tortillas, and even tortilla chips. “Over 65% of shoppers state that the way avocados are displayed influences their purchase decisions,” she adds, citing an Avocados from Mexico survey.

Packaging innovations are another major trend, according to Splane, with convenient formats, like portion-controlled packs and squeeze pouches, gaining popularity. Such formats, he says, make avocados easier to enjoy on-the-go.

Bazan adds that the avocado bag or packaged segment has also shown incredible growth over the past years and is still growing.

WHERE NEXT?

But in this already well-developed category, where are the opportunities for further growth?

With the eating-at-home trend continuing — the FMI estimates eight in 10 shoppers prepare dinner at home at least four times a week — shoppers are seeking meal solutions for their households, offering an opportunity to offer expanded value to shoppers, according to Stein.

“Featuring produce options in deli and foodservice is one way to increase assortment and entice shoppers who want to continue to eat at home with new options, convenience and enjoyment,” Stein adds.

“Don’t forget about the 63% of shoppers who put some or a lot of focus on nutrition/healthy items when shopping. Leaning into produce’s health halo is another opportunity to meet shoppers’ expanded definition of value in the foodservice department.”

Leaning into produce’s health halo is another opportunity to meet shoppers’ expanded definition of value in the foodservice department.

— Rick Stein, FMI — The Food Industry Association, Arlington, VA

Olson adds: “Making it easy for customers to assemble a meal at home with ingredients that are curated in a display gives them the satisfaction of making a home-cooked meal without the hassle of cooking in the old-fashioned way.”

Webster at Menu Matters advocates strongly that there should be more opportunities for cross-departmental collaboration. “If new produce is pulled in, the deli and/or bakery should find ways of promoting it,” she argues. “The departments should work together to help teach consumers not only what’s new and exciting, but how to use it, why the retailer decided to offer it, when it’s in season, and what makes it special.”