The Supply Side: Walmart’s ‘Deli of the Future’ part of remodel plans for 2020

As more retail sales move online, Walmart continues to build fewer stores and remodel about 500 a year. But the retailer’s deli departments are receiving facelifts.

Three Supercenter stores in Northwest Arkansas recently received deli renovations, which included new fixtures, signage and relocation of space within the deli, according to Walmart corporate spokeswoman Delia Garcia.

She said customer feedback, supplier research and industry insights founded many of the changes made in the initial deli makeovers. They are consistent with the investment Walmart continues to make in customer store experience.

“We know today’s busy customer is focused on saving time, as well as money. We designed our deli to allow more efficient use of selling space and provide greater convenience for customers,” Garcia said.

Walmart’s new deli design is similar to San Antonio-based grocer H-E-B’s layout but on a smaller scale. Walmart began to increase its fresh deli offerings in 2019 with fresh Marketside sandwiches, soups and wraps that are located for quick grab and ready-to-eat meals. Walmart replenishes the sandwiches and wraps daily and soups as often as needed. In the remodeled stores, ready-to-eat meal options are located in low, free-standing cooler cases near the deli counter.

The ready-to-eat Marketside soups sell at a value ($2.87) to the Panera Bread branded soups ($4.47), which are each 16 ounces in size and sold next to each other in the same cooler case. The Marketside sandwiches range from $4.57 to $5.98 for footlong varieties. The Marketside wraps retail for $3.98, and the six-inch sandwiches range from $3.98 to $5.47 each, depending on the meat cuts.

A significant pain point for customers trying to buy deli meats and items during busy shopping times is waiting in line for the service. Walmart sought to reduce queues by adding a “Deli Fresh” cooler that has sliced meats and cheeses from Prima Della Delicatessen brand products already packaged and separated in the case for customers to grab what they want. The pre-sliced meats are customers’ most often request at the deli. They are also sold in different size packages so customers can grab the quantity that best fits their specific needs.

Garcia said the makeovers added square footage for gourmet cheese assortments and freshly made salsas, various dips, hummus and other cold foods for entertaining. The large display marked “Entertaining” is made to be found easily. Walmart also added a fresh Rana pasta and sauces assortment in the deli section.

Aside from Marketside pizzas, rotisserie chicken, fried chicken and various other hot foods, the Walmart deli began offering take-home meal kits in late 2018. The meal kits feature a range of entrées from enchiladas to pot roast and chicken parmesan, which are priced at about $5 each.

More recent additions include sushi offerings such as California rolls and spicy crab rolls, which sell for around $5 for 6 ounces. Walmart has doubled down on its Marketside private branded offerings in the deli but also gives consumers some choices with brands like Reser’s, Hormel, Taylor Farms, Panera, Bob Evans, Van’s Kitchen, Pioneer Woman and Moji Sushi.

“Our customers have seen improved product quality, new merchandise display cases and a greater emphasis on meal solutions and product flow reflecting their needs ranging from food right now, to food for later, to entertaining. We are committed to keeping the customer at the center of everything we do, and as their needs continue to evolve and change, so will our strategy and department,” Garcia said.

DELI FRESH
Nielsen reports that even with the rise in online shopping in the U.S., physical stores are still sought out by many consumers for “fresh” products. Nielsen said deli and bakery could play a considerable role in luring consumers into physical stores. Data show online grocery shoppers spend 1.5% more in-store on fresh foods than the average consumer.

Although e-commerce represents just 4% of grocery sales, it accounts for nearly one-third of total growth. Americans are increasingly heading online to shop for nonperishables, household items and pet products, making the concept of stock up grocery trips a thing of the past for many shoppers. Nielsen said as more categories shift online, retailers must find ways to be different, and fresh is the place to do it.

“Fresh is the growth engine of the store, as gains in these perimeter departments translate to total store success,” the report states. “Retailers with well-established fresh departments provide us with a glimpse into the future and a roadmap for others.”

Nielsen segmented its stores based on the percentage of overall store sales from fresh food departments. Top performers generate 43% of total sales from perishable foods, compared with an average of 32% for the same measurement across all retailers. They’re succeeding by taking “freshness” to the next level, the report states.

The report found for most successful retailers, deli and produce departments provide the most significant contribution to total perishable sales, debunking the belief that the meat department contributes the biggest impact to the success of the whole store. Nielsen said this trend also reflects consumers growing demands for convenience.

For all retailers, the fresh seafood and deli departments continue to rise in-store. For fresh retail superstars, success hasn’t come from necessarily carrying more — or fewer — items, but from having the right items in the fresh category, the report states.

“For fresh retailers, it’s about consumers craving a destination, not for stocking up. Experience, personalization and convenience win. Foodservice offerings are up 10% in sales year over year. Fresh is the last stronghold for brick-and-mortar. Retailers that want to win across the store need to focus on fresh,” Nielsen noted in the report.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.