-By Meg Major

Eager to cater to consumers' demands for convenience, value, quality, and variety, grocers and suppliers are viewing prepared food programs through new eyes, and for good reason.

High gas prices and an overall frail economy have many consumers retreating from restaurants and eating more meals at home. This begs the question: How can supermarkets maximize these at-home eating trends, and how should they be adding value to their restaurant replacement solutions?

To address the challenge, Progressive Grocer assembled a group of leading supermarket and supplier executives for a lively and insightful exchange of ideas.

On the agenda:

Identifying paradigm shifts, Probing consumer desires, Pinpointing the greatest opportunities and challenges, and Creating effective at-home meal strategies for this new marketplace.
Moderated by Meg Major, PG's Senior Editor/Fresh Food, the roundtable featured the following retail participants: Ed Ambrose, director of prepared foods, Supervalu, Inc., Eden Prairie, Minn.; Mike Buck, v.p. of service deli & prepared foods, Supervalu; Nancy Gaddy, v.p. of deli and bakery, Winn-Dixie Stores, Inc., Jacksonville, Fla.; Craig Inabinett, director of deli/bakery operations, Piggly Wiggly Carolina Co., Charleston, S.C.; Mike Merritt, deli merchandiser, Buehler's Fresh Foods, Wooster, Ohio; and Mike Tilden, director of service deli merchandising, Supervalu.

Supplier participants at the table were Jason Dobis, v.p. of sales, Harry's Fresh Foods, Portland, Ore.; Marianne Hilton, director of national accounts, retail, Anchor Packaging, St. Louis; and Dan McMurray, v.p., Southern Store Fixtures, Inc., Bessemer, Ala.

Additionally, Harry's Fresh Foods, Anchor Packaging, and Southern Store Fixtures graciously sponsored the roundtable.

Progressive Grocer: If traditional grocers are intent on taking full advantage of the economic shifts that are currently unfolding, then a large percentage apparently need to rethink their deli/prepared food operations to bring some of the same benefits and conveniences that consumers are accustomed to experiencing with restaurants. What are your thoughts along these lines?

Craig Inabinett: When you look at the food that we can offer and prepare, no one [else's products are] more nutritious or fresher for family meals than supermarkets'. I think that's a motivator that many supermarkets should be playing up: the value of family meals. It's something that will help all of us, and won't overlap with the competition. This is a segment that can bring more of the food dollar back into the grocery business, and the deli/bakery is one of the most effective vehicles to drive that forward.

Nancy Gaddy: We are trying to provide meals you would prepare at home if you had the time. I think people want to feel good about what they feed their families every day. They're becoming more health-conscious. We're seeing a trend toward casual dining from fine dining, because people are dining out less often. The cluster of consumers that aren't eating out as much generally know how to cook. We see educating the younger generation as a key challenge. We want to provide meals that are quick and convenient, but that are also high quality. It's basically what we have been doing for the past few years, but we now see more of a move back to the delis because of the changes in the economic landscape right now.

Ed Ambrose: To jump on what Nancy is saying, the 17- to 24-year-old generation doesn't know how to cook. That generation thinks microwaving and reheating is cooking. We need to teach them how to make meals by taking basic products and quickly assembling them, so they can have a fabulous meal that's healthy, tasty, and easy. I think it's all about teaching people how to do just that, and we have a great opportunity to transfer this education, beginning in the deli, by providing these kind of solutions.

Mike Buck: Customers had gotten used to eating out, but they have cut back on doing so, and now that $50 to $100 check is coming back to supermarkets. However, when those people come back to us from the restaurant where they've had their meal assembled for them, the difference between that meal and what they're eating at home in many cases is like night and day.

Over the last year, we had some customers send us pictures of what they eat at home, and it's frankly pretty scary. One of the best meals that we saw was a lean protein and steamed veggies. It really gave us good insight in terms of looking at how we can help bring them back to the grocery store for their meals, instead of a restaurant.

PG: Mike, I imagine it must have been a bit unnerving to discover that so many people are struggling to eat healthy meals at home, but I applaud the process you employed to obtain these insights. Could you elaborate a bit on that?

Buck: It was an outcome of focus groups we conducted across the United States, representative of where we have banners. We asked customers what they wanted and needed from their store of the future, and specifically what they needed from the deli. I was particularly interested in the data that was revealed in the Austin, Texas market, because of the interesting demographics and lifestyles there that could be applied in other markets. And regardless of the demographics or income levels -- we had some folks making $100,000 a year, and some making $30,000 a year -- the pictures didn't look that different.

PG: So it's safe to say that there's ample room for improvement within our industry to do a significantly better job of educating shoppers?

Marianne Hilton: Absolutely, but the people represented in this room are clearly going the extra mile and are ahead of the curve. I say that because the effort and time spent listening to consumers to find out what they want, whether it be focus groups or shopper intercepts, is amazing, and really helps you stay on track.

What we've done is similar in that we have focus groups that we're working with, and it's been interesting to see their responses. They want the packaging to be a viable value, meaning that it needs the functionality to get it from the store to the home, and also from package to plate -- whether it's a warming unit to keep the product hot, or a cold product that can be microwaved as soon as they get home.

PG: In the realm of "restaurant replacement" meals, what's hot and what's not from a product and/or preparation standpoint?

Mike Merritt: We travel both avenues. We have 13 stores, 11 of which have full-service restaurants that seat anywhere from 150 to 250 people. We see where the business is shifting in real time, and our foodservice sales are exceeding our deli sales. I've only been with our company since October 2007, but Buehler's has always had a strong foodservice program. We make everything from scratch in our central kitchen, where most of our prepared food items are produced. It gives us a better chance to hit that gross and be able to control our shrink, instead of paying top dollar to bring those items in. If the customer is looking for something special, we have the ability to go back and get the corporate chef to make a recipe. We have chefs on location at every store, which helps us stay very close to our customers.

PG: What other significant shifts are taking place relative to supermarket fresh meal programs?

Mike Tilden: I think our customers are coming back to us in a way that's more sophisticated than they were before. I think it's a transformation, where it's not about ham sandwiches or basic entrees. I think they still want that, but in a different package, at a much healthier level, and as fresh as possible. We also have to be cognizant of the specific customers in our stores, and how they've changed. I think the customer of five years ago is not the same customer we have today. We have to be more savvy when listening to them, and give them what they want, or they go out the door.

Dan McMurray: The terminologies have also changed. I started in this business in 1994, when the buzzword of the day was "HMR," and nobody was going to cook at home anymore. But when the dust settled from the equipment point of view, retailers basically had pizza and sandwich cases, and maybe a hot food case. Now we're re-educating the customer on how to cook at home, and it's such an exciting time, because a number of the products that we're putting into the marketplace are fascinating. The term "restaurant replacement" really speaks to the quality and the breadth of the offering that's greater than it was 10 or 12 years ago.

Jason Dobis: Consumers are eating at home, but aren't necessarily cooking at home. Safety is obviously another big thing as it relates to how we package the product, and how we deliver it from the time they leave the store until they get it home. There are a lot of interesting things going on. From a manufacturer's standpoint, we try to align ourselves with retail partners to develop a strategy they want to deliver. But we still have to have the same end result: bringing more foot traffic into the service deli, and we must get those insights from consumer focus groups, so we can find out who the customer is, and lining up that knowledge with the retailer.

Hilton: Educating store associates and customers about your brands, the quality of products or services, and the packaging you're putting your products in will become even more critical going forward.

Merritt: We have a "Smart-to-Eat" program throughout the store, which we tie into the deli and our convenient dinner-for-two meals. The nutritionist we work with has set up a veggie-based diet for the restaurant, which we're also tying into the deli.

PG: Meatless meals are picking up steam. What other key trends are shaping menu offerings these days?

Dobis: Healthy and good-for-you have been around for a long time, but look at low carb, which spanned about two years during its peak, but which is still part of the good-for-you concept. Consumers say they want something good-for-you, but it's essential that it tastes good. Innovation isn't just about menuing, it's also about packaging -- how it's delivered to the consumer.

Buck: We try to look at the lifecycle of trends, which is often generational. But there are a number of other things that need to be considered when measuring trends, whether it's nutrition, style of packaging, product quality, or flavors. In other words, you can't apply a global perspective to it; you have to do a microlevel analysis, or you'll miss a bunch.

Ambrose: Consider the Food Network, and all of the kids who watch those programs on a regular basis. Even though they don't cook, they're mesmerized watching these shows. They know that Bobby Flay is an expert at barbecue, or Paula Deen, at Southern cuisine. Young kids are educated about flavor, cuisine, what's hot, and what's not -- so that's a trend.

PG: Trend-spotting is certainly fascinating, as are the complexities of executing an effective meal solution strategy. What do you consider to be your foremost challenges?

Merritt: Coaching and teaching our staff members about how to be salespeople to make an additional sale, to strike the extra deal, by suggesting, for instance, a good wine that pairs with a certain meal -- that's probably our biggest struggle.

Inabinett: Consistency is a real challenge from location to location. We have some standard recipes we cook and prepare in the store, and we also have a central kitchen, which is a big plus. But different seasonings are used for the same foods in different areas of our stores. We have to be cognizant as we focus there. It's important that the guests love the food.

And it's been hit on a little while ago, but it bears repeating: You have to open up and ask your guests what they see and what's missing, and focus to rally the team to be consistent, to deliver the same experience, whether it's 11 in the morning or 7 at night, with the quality of the products.

Ambrose: I believe the traditional deli as we know it needs to be reinvented. If we're going to be about solutions for food, how can we make it look appealing? And that goes back to training. How do you have the right people in place throughout the whole store? How do we become more viable for food solutions, and give them information and teach them all of this fun, fascinating stuff? We want them to walk in there and want to eat. I think people are becoming very weary of traditional supermarket deli fare. Obviously, some people are further ahead than others, but change is coming.

Gaddy: Being able to deliver fresh-quality, value-added meals to consumers while finding programs that are easy for our stores to execute is a challenge, as is associate turnover and profitability. Plus there's that monster we call "shrink" that's out there that we have to deal with, and, as we well know, it's a big challenge. Finding programs that our associates can execute and deliver is among our largest challenges.

PG: Are your vendor negotiations changing to reflect those parameters?

Gaddy: Absolutely. Being a larger chain with units across such a diverse area, we always look for the quality of product. We need local resources, and we have very diverse markets.

Our opportunity is to work with local DSD vendors who deliver fresh to us on a timely basis. We are finding that, outside of the rotisserie chicken program, it doesn't work for all 522 stores. You have to be able to customize your program depending on the neighborhood, and that's one of the things we're working on as an organization: being a neighborhood market, with the favorite products that customers would like to find in their hometown store.

Buck: In a nutshell, we have a credibility issue. We messed this up about 15 years ago, and as customers come back, the reality is that the food hasn't changed that much from what we were selling back then. But the fact is, it's hard to bring new solutions to market. We're in the process of doing that, but we're at risk of perpetuating credibility issues going forward. If we don't get it addressed quickly, we'll add more problems.

Tilden: When the pressure on the numbers came on, it completely changed the quality of what the customer wanted: a nice, fresh entree. Mike [Buck's] point with the credibility issue goes back to consumer perception of what we delivered in the past, vs. what we have to do today. What we have to do today is over-deliver on anything that we do, and if we screw it up again, we very well might not get another chance at this. If what we're saying is, "Come back in and see what we're doing. We studied you. We know what you want," and then don’t deliver on that promise of restaurant quality at reasonable prices, they won't come back. That's something we all need to be aware of.