Lunch meat could beef up retailer profits, Nielsen says
Lunch meat is a convenient protein staple and a $9-billion category in the U.S., yet it has declined in terms of dollars and volume sales during the past year, according to recent Nielsen research.
The data analytics company suggested retailers and manufacturers may be able to reverse that trend by keying into consumer behavior regarding choices between deli and packaged meats.
Nielsen pointed out that packaged lunch meat brands could focus more on their fresh aspects and associate more with fresh products to enhance sales.
Today's consumers want convenient protein options, which is one of lunch meat's major assets. However, meat cut at the deli and prepackaged meat serve different consumers with different priorities. The important thing is to serve and retain both.
Nielsen noted that 52% of lunch meat buyers spend the majority of their money on packaged items. While deli lunch meat buyers are a smaller group, they spend more overall. This could be a reflection either of higher prices at the deli area or the fact that deli shoppers tend to buy a greater quantity of product per trip.
There are also priority differences between deli and packaged lunch meat shoppers. Deli meat shoppers pay the most attention to flavor and customization, while the others find price and packaging to be the most important. Retailers should craft messages to reflect these differences and focus on the different groups' concerns.
Deli meat customers are already in one of the most popular areas of the store, offering seemingly endless possibilities for customization. According to a 2016 sales review of the deli counter published in Winsight Grocery Business, while more people are buying deli prepared foods, meats still comprise a fifth of deli counter sales. Meat cut to order for consumers gives the feel of customization and freshness.
Consumers are not only focused on fresh and healthy products, but they are increasingly looking for antibiotic-free, hormone-free and nitrate-free packaged and deli meats. Meat producers are responding this trend by developing the cleanest labels they can while still producing safe and affordable products — though prepackaged deli meats are often thought to contain more preservatives, sodium or chemicals.
Changes to formulas and preservatives may not be enough if consumers don't understand what they mean. According to Label Insight, 35% of consumers don't purchase items if the ingredients confuse them, and 54% would pay more for products listing ingredients they understand. While ingredient lists are readily on the package for prepackaged meats, they're available behind the counter at the deli. Many common ingredients sound like they're more chemical than natural — and may detract potential buyers. Language on the labels and at the deli counter may help consumers understand what they may be buying.
The key for retailers and processors is to understand consumer motivations and harness that information with in-store policies and practices. The right mix of promotions, messaging and products can keep both categories top of mind for consumers looking for a convenient protein source, no matter which area of the store they're in. Product sampling is an easy and eye-catching way for retailers to get consumers' attention, and advertising products that pair well with lunch meat on adjacent signage could help nudge shoppers that are on the fence.
Keeping consumer health top of mind is also important. There have been several reports decrying the health value of processed meats — especially a 2015 World Health Organization report that says they can cause cancer. Letting consumers know that products contain fewer harmful chemicals creates a selling point for lunch meat options as well as a reason for them to return to a retailer that provides that kind of information.