Last updated on September 5th, 2012 at 02:51 pm
[gn_note color=”#FFCC00″]The following is a Guest Column as a part of our Ethnic Merchandising Feature in the March Shelby Report.[/gn_note]Jim Kim with Joel Stark, JFE Inc.
Special to The Shelby Report
Sushi is one of the grocery deli merchandisers’ top dilemmas, but it also ranks among their biggest successes.
Even in markets that are large but not exclusively upscale or urban, weekly sales can top $30,000 in a full-service sushi kiosk when the grocer and vendor apply the right plan and principles.
More than 10 national sushi vendors now vie for major grocery chain accounts. That may not seem unusual at first blush since thousands of products fight for shelf space, but sushi, when sold as a prepared food in the full-service model, is one of few products that fight for actual vendor-operated real estate within a grocery store.
Why are chains staking their most prime spots on this category? Because sushi gives more.
Not only does sushi now merit the space in sales per square feet—as much as 75 percent higher than annual store averages—but visible sushi offerings build customer traffic and enhance the deli atmosphere.
Sushi kiosks have become vital to the transitioning of grocery delis into eating destinations, surpassing even weekly sales in the now ubiquitous coffee bars found in grocery stores.
According to independent consulting firm The Perishables Group, deli-prepared sushi made up 5.3 percent of national deli sales in 2010. The weekly average for all deli sales that year was $11,306.
Consider that leading sushi companies’ respective top 10 stores are reportedly averaging $12,000 in weekly sales. While that often is achieved at larger than average stores, it still is a massive number—and one well within reach for stores that today only passively merchandise sushi.
Despite its ability to generate buzz and atmosphere, this culinary form was originally hobbled, unbelievably, by its merchandising. Sushi preparation engages the consumer. But shoppers would run across it displayed in inline cases in the seafood department, with no visible chef or preparation, let alone any sampling. Stores were content with $800 in weekly sales for a niche product.
If this sounds familiar, it’s because that attitude still exists in chains that have the resources to upgrade, but are unfamiliar with the principles that have helped kiosks thrive—even in sometimes surprising locations.
The sales gap
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In 2010, deli-prepared sushi made up 5.3 percent of national deli sales, according to independent consulting firm The Perishables Group.[/gn_pullquote]Top chains that were the most open-minded about sushi 10 years ago have hurried to do physical upgrades from inline in order to meet sales demand.
Even as those stores have embraced the full-service sushi bar as a deli centerpiece capable of generating more than 1 percent of total non-fuel sales, many companies unknowingly sacrifice sales by settling for $1,000 to $2,000 weekly from a passively-run sushi case.
Chains like Kroger, Whole Foods, Fry’s, Wegmans and others have demonstrated that the right sushi partners can double sales by adding just a bit more space.
Offering full service is key to bridging that giant gap and potentially increasing sales even more.
Full-service sushi bars
Sushi is different from other perishables. It’s show business. That element drove sushi’s original U.S. popularity, but it has been lost in its grocery store incarnation.
It’s even more critical now to restore it in order to meet the expectations of restaurant-savvy customers.
The most successful grocery sushi bars combine the quality and variety of upscale sushi restaurants with convenient, ready-to-eat packages prepared by engaging, business-minded chefs.
We’ve found the only thing that matches the fun of watching a sushi chef prepare the meals may be enjoying the “wow” response a party tray of edible art elicits from one’s guests, or, perhaps, the simple satisfaction of digging into a quick solo meal that rivals the quality of a favorite ethnic restaurant.
In partnering with a sushi purveyor, the most critical principles are customer engagement and sampling. They should be inseparable from sushi.
Ensuring every customer knows sushi is available must be a priority. The first step toward a full-service program is the placement of a kiosk with an eye toward traffic flow and visibility. Shoppers should be met by clear signage and a large, accessible case with eye-catching menu variety. Put sight lines and sneeze guards in place to allow customers to watch chefs create their products. That one final principle creates the show business element that brings in new customers—and fosters the fanatical loyalty of some, as a few big grocery chains now know.
According to the International Dairy-Deli-Bakery Association’s annual trends report “What’s in Store 2012,” more than 80 percent of supermarket deli customers look for newer, trendier items regardless of whether they regularly purchase them.
Seafood or deli?
Retail’s greatest growth stories come from out-of-the-box thinking. We could argue that the creation of deli wonderlands in Wegmans, Whole Foods or H-E-B were still basic in their customer focus. They were bold moves nonetheless.
But moving sushi to the deli involves almost no risk because its sales impact is already proven and its customer service culture is a natural fit.
Grocery leaders’ approach to sushi and its location in the store must be thoughtful and deliberate. Sushi’s proven sales impact—again, potentially in the tens of thousands weekly—are eye-opening. Lackluster sales result from inadvertently hiding one of the most exciting products in the store.
Even when chains utilize a top sushi vendor who produces a fun, varied menu, some unwittingly content themselves with tepid sales if they’ve categorized sushi incorrectly.
When sushi is merchandised in seafood, it has usually been delivered from an off-site production facility. Visibly prepared, ready-to-eat sushi appeals to customers, and they should intuitively know to find it with prepared meals in the store.
On today’s social media sites, like yelp.com, (yes, your store’s prepared products are on there along with the restaurants) customers remind each other and us every day where and for what they’re looking. They want the fresh, fun and unconventional experience that first popularized sushi.
Your sales goal should be for every customer to see and know the store has sushi rather than hoping customers stumble across it on a mission to find the right cut of fish. Delivery doesn’t optimize your sales. It’s not win-win. It’s not fresh.
Where’s the ceiling on sushi sales?
To put it plainly, despite dramatic sales growth, the full potential of sushi has not yet been seen. Not every store can move a ton of this category. It requires detailed planning by merchandisers and vendors. But leading sushi companies have seen weekly sales doubled or even tripled when grocery chains give the right attention to detail vs. passively filling cases. By using previously untapped demos, a volume store in a market of any population size with the right mix of upscale customers could improve overall weekly sales 2 to 4 percent.
In order to tap their full sales potential, grocers must embrace and support sushi as a key category in destination delis the way a few regional powerhouses have. Support it with vibrant signage and marketing. Bring it into the print and online advertising fold, too.
In tandem with these efforts, both the vendor and grocer must not only engage the customer, but also explore menu development and track sales by SKU with a local focus.
Sushi and deli sales will continue to thrive for those who embrace full service and spotlight sushi’s show business element.
Jim Kim is CEO of JFE Inc., which manages full-service sushi bars in worldwide retail and wholesale grocery, travel , university and corporate settings. Visit www.jfefood.com or call 713-463-7777.
