By Jonna Parker, Fresh Center of Excellence, IRI and Anne-Marie Roerink, 210 Analytics
In 2021, we saw a tremendous resurgence of the deli and perimeter bakery departments. While some of this can naturally be attributed to the reopening of self-serve and full-service departments that were closed for parts of 2020, there are larger growth trends emerging. And grocers who lean into them can continue this momentum in 2022 and find many promising opportunities to boost incremental sales and customer loyalty through their deli and perimeter bakery departments.
In the coming months, we expect ongoing growth in entertaining at home, a desire among a cooking-fatigued populace for more convenient meal solutions, and the ongoing need to solve for more meal occasions at home. Solving for all these shopper needs should be a top priority.
Perishables are High Performers
A look across the fresh foods departments for December 2021 shows perimeter strength. All departments with the exception of seafood (and its supply chain issues) gained year over year, with the biggest sales increases going to deli.
Source: IRI Integrated Fresh, Total U.S., MULO, fixed and random weight items combined into department views
The deli department saw especially strong dollar sales gains versus 2020, thanks in part to the pandemic-related department closures previously mentioned. But we have also seen a particular resurgence in convenience-focused items as consumers gravitate back toward time-saving foods that they can easily prepare at home with less planning, prep and cleanup.
Source: IRI, Total US, Integrated Fresh, MULO
The deli prepared and deli entertaining categories made strong comebacks in 2021, with sales further accelerating as the year progressed. The impressive deli entertaining and deli prepared numbers show that deli is now a big player in both everyday and holiday meal occasions.
For brands and retailers, this underscores the tremendous potential of deli-entertaining solutions for all 2022 holidays and celebrations. We’re obviously not out of the woods yet, pandemic-wise, and it is reasonable to expect a continuing trend toward home-centric entertaining in 2022’s early months.
At the same time, the pandemic has also continued the trend toward more meals at home as more people continue remote work versus pre-pandemic norms and some remain hesitant to head back to restaurants amid the Omicron wave. In December 2021, the share of total meals prepared at home remained at 80% — below pandemic highs but still well above pre-pandemic norms.
Source: IRI POS Data, Syndicated TSV, data ending Dec. 27, 2021, Total U.S. MULC
With percentages of breakfasts, lunches and dinners eaten at home all still noticeably elevated above pre-pandemic levels, deli and bakery meal solutions will continue to be a promising area for grocers.
Fresh Bakery is Booming
Bakery departments faced issues similar to deli in 2020, with center-store bakery driving sales as a result of pandemic-related closures of self-serve and some full-service bakery areas. Because of this, aisle bakery barely surpassed its 2020 sales, but the fresh bakery boomed as holiday and special-occasion celebrations returned.
Source: IRI, Total US, Integrated Fresh, MULO
In perimeter bakery, we saw the holidays drive strong cake and cookie sales with some smaller categories such as muffins, donuts, croissants and specialty desserts growing even faster.
Making the Most of 2022
Grocers can make the most of their deli and bakery momentum in 2022 by giving shoppers more of what they want — convenient solutions for all three meals of the day, grab-and-go offerings and solutions for home entertaining. Top opportunities include:
- Pre-sliced, pre-packaged deli meat options that go beyond turkey and ham and that include more portion-size variety to meet the convenience needs of smaller households.
- Premiumization opportunities in deli entertaining through deli trays and charcuterie boards as people continue to celebrate at home. Amid rampant inflation, shoppers are less sensitive to price increases on these “occasion splurge” items.
- Quality deli entrees and complete packaged meals to meet the convenience needs of cooking-fatigued shoppers.
- Prepackaged deli sandwiches and salads to solve for the continuing trends of remote work, more at-home lunch occasions, and a desire for healthy lunch options.
- Perimeter bakery items like muffins and croissants that provide a coffee shop-like experience for breakfasts at home.
- Restaurant-quality items for an affordable indulgence. This may seem counterintuitive in today’s inflationary environment, but it’s an opportunity for grocers because price hikes at full-service restaurants currently outpace those at retail grocery.
- An uptick back to midsize specialty cheese and party trays as people continue to move toward larger but still modest gatherings.
- Items like cheesecakes that can be served at a party but also frozen for some individual servings later.
These and other opportunities for fresh, convenient solutions can help grocers build on the deli and fresh bakery momentum of 2021. By better meeting shopper needs, these fresh opportunities can both boost customer loyalty and combat downward volume pressures in the challenging inflationary environment of 2022.
For more information on how you can find growth in the deli and perimeter bakery departments, reach out to your IRI representative or IRI@IRIworldwide.com.