Podcast: Play in new window | Download
Grocery Guru Ep 5: Discussing the Deli Counter Demise
We all love them, buy a treat from them occasionally, but have they had their day? Are we witnessing the demise of the Deli Counter? Is it time to put them out to pasture?
You Can Read the Full Deli Counter Demise Episode Transcript Below:
Darren A. Smith:
Welcome to week five with the Grocery Guru, there is Andrew Grant. Andrew, how are you doing?
Andrew Grant:
Yeah. Good morning. I think it’s still good morning, Darren. But suffice to say I’m in mourning.
Darren A. Smith:
You are in mourning.
Andrew Grant:
See what I did there? See what I did there?
Darren A. Smith:
I see that was a good double pun. I understand you’re in mourning because of some news about some counters. Is that right?
Andrew Grant:
Yeah. Sainsbury’s closing all their meat, fish, and deli counters, which was ground zero for me as a fresh face graduate buying fish for Sainsbury’s fish counters. So a little bit of history ending for me so hence the small little tear of regret.
Darren A. Smith:
So the retail landscape, the high street is changing, counters are going for one of the big supermarkets. But interestingly, I also read that Waitrose has taken advantage of this and put more lines, extended their range on their counters.
Andrew Grant:
Yeah, it’s interesting, isn’t it? I’ve got a sneaking suspicion that a person with a calculator and a red pen made the decision to close those counters. If you dial into their half-year results presentation to the city, they said they’ll save 60 million by closing the counters. Now their underlying profits are really 300 million, so that’s a good 20% of profits that will get boosted when they close them. So I think it’s very much been a financial decision.
Darren A. Smith:
And I’m not surprised by that. Now, did you know that MBM used to have a sister business called MCM?
Andrew Grant:
Well, I do remember you used to be in the counter business because the other point I was going to make it all right, you’re going to save 60 million in operating costs. But what do you do with all that metal and perspex and refrigeration and yeah, it’s an expensive kit.
Darren A. Smith:
So we used to be very big into counters. At one point for four years, we coached all the food counter people at Sainsbury’s and then made a great market share difference for them. They then took it in-house and we took the idea to Tesco, had a team of 60 people coaching all the people behind counters. So I know a bit about it. Now what one of the Tesco’s guys said at the time, was the counters was the window to fresh. And if shoppers saw counters looking good and feeling good and it was intangible, they said that was something we need to keep. Because it keeps shoppers coming in, even though they didn’t buy from it.
Andrew Grant:
Well, I think that was unfortunately the reality. Having spent a bit of time on fresh fish and deli, unfortunately, yeah, it’s poor Mrs. Miggins or Mr. Miggins shuffling along to buy six slices of crumbed ham for their lunches. So the only stuff that ever sold was the basic stuff, your pork pies and your breaded ham and cheddar cheese, which obviously you can also get in pre-pack. So the only people who tended to buy on the deli counters were people wanting tiny, tiny portions. And yeah, I can remember doing it myself trying to launch exotic stuff, exotic hams, and exotic sausages and God knows what. It just didn’t sell and then after about six weeks, you get all the store managers and area managers complaining about waste. So you took the easy decision. I think it’s a real shame.
Darren A. Smith:
It is. It is a shame. Unfortunately, I see counters and always did, a bit like a turkey at Christmas. I wouldn’t have a Christmas without one but I don’t necessarily think about it first.
Andrew Grant:
Yeah. Yeah. It is going to be interesting to see whether the decision will come and bite Sainsbury’s in the bum. Because I mean two things, if you think about the big stalking horse in the background that’s about to go physical literally, with physical stores is?
Darren A. Smith:
Amazon.
Andrew Grant:
Amazon. And who was the first physical business they bought in the States to get themselves into physical retailing?
Darren A. Smith:
Oh. Oh. Fresh… No.
Andrew Grant:
Begins with a W.
Darren A. Smith:
World of… Go on.
Andrew Grant:
Wholefoods.
Darren A. Smith:
Wholefoods.
Andrew Grant:
Now, anybody that’s seen a Wholefoods particularly in the States, and I’ve seen a few, that is all about experiential shopping. Lots of sampling, lots of massive displays of fresh stuff, just fabulous. Wouldn’t it be interesting Sainsbury’s close all their deli counters and all of a sudden, Amazon come up with a huge in your face, big entertaining displays of fresh foods?
Darren A. Smith:
Because also you can experience something there, you’ve also got the environment part where maybe you go up with a tub and get two pounds of olives and take it away in your own tub type thing, which is perfect. The other way that people used to look at counters and they used to say to us is if only the people behind them could upsell. But they were trying to upsell to older people who didn’t have the budget but there were about a third of people that were affluent who likes shopping at the deli. What we found was that if they could see those people as their mum and treat them like their mum, they would buy more. Because if you say someone upsell who works behind a counter there, oh no, I don’t want to try and manipulate my customers. But if you say, okay, it’s your mum coming in, what would you do? Mum, you’ve got to try this new cheese, it’s great.
Andrew Grant:
Yeah. Well, here’s an interesting twist. Thinking outside the box, what are the supermarkets doing at the moment with all that big non-food space that they can’t fill? They’re letting it out to New Look and Primark and Timpsons. So why not turn the deli counters over to some entrepreneurial young farm shops or independent delis or whatever. Create a lot of theatres, be really good for the community. I guess our supermarkets don’t think that creatively anymore.
Darren A. Smith:
Well, interestingly, you’re right, they don’t. Five years ago when I was heavily into this game of counters, Newitts, you may have heard of them they’re from Tame. They did-
Andrew Grant:
Right.
Darren A. Smith:
… a deal with Budgens where Budgens said you can take over 200 of our counters, whatever it was. We want to pay 10% or whatever it was and Newitts run them and they made a sterling job. It is very possible if they do that.
Andrew Grant:
As I said, I think this decision is just an accountant’s decision with a red pen and a ruler and a calculator saying 60 million, it’d be nice to have. Let’s have that. And they haven’t really thought beyond that. It’s a real shame but I guess it’s a massive opportunity for your high street deli, your farm shop, or your farmer’s market because that’s where people will now go.
Darren A. Smith:
Well, that’s very true. Yeah, it is very true. I think the bit that you were saying earlier about the landscape maybe goes full cycle and comes back. Maybe it just does. It’ll be a shame if it was forced by Amazon, rather than one of the produce supermarkets.
Andrew Grant:
Well, but it does sort of link back to what we talked about in episode one of this, the urban fulfilment centres. Because I mean, again, Sainsbury’s results, their online grocery has doubled since March. And it’s now 15% of their grocery sales are online for home delivery. 40% of their total sales are now online but that’s obviously because of the Argos effect. But if everybody starts shopping at home, then why do they want to go into a physical store anymore if all it is, is aisles and aisles of the boring packed product. If you’ve got fast home delivery with a slot available within 24 hours, you will only go to a supermarket to experience the fabulous bakery, the fabulous fresh meat, the phenomenally not lovely produce. And if that’s not there and it’s just a replica of a warehouse, you wouldn’t shop there.
Darren A. Smith:
Well yeah, that fills me with the emotion of sadness because Sainsbury’s launched their campaign many years ago now about sleep shopping. That we just walk around with a trolley and we sort of pick up the things we normally do. If there really is nothing to experience, then you’re right. Maybe we’re going to either sleep shop or of course we’re encouraged to order from home.
Andrew Grant:
Yeah. But as I said, I think it will be interesting, you say Waitrose, possibly Amazon may actually be thinking slightly more innovatively and playing a longer game.
Darren A. Smith:
Well, this could be a place where Waitrose really win this market.
Andrew Grant:
Yeah. I mean they have got the demographic, I guess that would be more likely to buy interesting and exotic products off the deli. But obviously, Waitrose butt up to Sainsbury’s up-market customers so yeah, steal a few of those and you lose quite an affluent profitable basket very quickly.
Darren A. Smith:
You do. Talking a little bit exotic. I saw that Sainsbury’s launched their sushi counters two, three years ago I think. I was in a Sainsbury’s near here, which is Oxford a while ago, absolutely dead. Two or three packs on the counter and you just wonder the same number cruncher that has arrived at closing our counters can’t have arrived at sushi counters. So you’ve got two different schools of thought going on here.
Andrew Grant:
I think the sushi counters are a third party.
Darren A. Smith:
Are they?
Andrew Grant:
Certainly one in the big London Colney one is a third party one so I don’t think the Hoban based accountants will have got to those yet. But you’re right, they don’t seem to sell very much and there’s nothing worse than sushi that looks like it’s been hanging around a bit.
Darren A. Smith:
And also your waste, managing the waste of that is going to be impossible.
Andrew Grant:
Exactly. Exactly. So anyway, we will see what happens but as ever, interesting times.
Darren A. Smith:
It is the demise of the food counters. Okay. Let’s leave our viewers on maybe a cliffhanger. Any ideas what’s coming at us next week?
Andrew Grant:
Oh, you ask me that every time but things are moving so quickly. Maybe it will be, what does grocery look like now everybody’s going to be inoculated. I don’t know. Let’s see what the news brings in the next few days.
Darren A. Smith:
All right. The other thing we’ve got is the rules for shopping at each of the supermarkets seems to be changing, maybe we’ll pick that up next week.
Andrew Grant:
By the day.
Darren A. Smith:
By the day. Grocery Guru, Andrew, thank you. Till next week.
Andrew Grant:
Bye-bye. Ciao.
Darren A. Smith:
Okay. Bye-bye.
