The Deli Manager Principle

A few years ago I had an interesting experience while working with the store management teams for a chain of supermarkets.  I was implementing a process focused on improving bottom line results consisting of six sessions taught over five months.  Among other things the department managers were required to develop measurements such as profit per day, sale per customer per day, and other things that increase performance visibility. These measurements are designed to give department managers a perspective of their department that they can’t see with traditional measurements. Thus many managers become quite entrepreneurial and creative in how they approach their job.

One of the department managers in this class was a Deli Manager who had been the department manager for over ten years. Because of her experience, reputation, and previous success, she was very confident in her way of managing and seemed reluctant to try the new measurements and techniques the workshop required.

However, after a couple of months began to glance at her scorecards, perhaps mostly out of curiosity. With her curiosity peaked, she began to see things about the daily performance of her department that she had never seen before. For example, she learned for the first time that although her department was profitable for the entire week, she actually lost money on Wednesdays. The shocking reality of being unprofitable on Wednesdays did not set well with this very proud and experienced Deli Manager.

So each day as she posted her scorecards in her department she began to analyze them a little closer. Gradually, the scorecards began to talk to her and said things that she didn’t know. For example, on Wednesday not only were her sales 17 percent lower than any other day of the week, but also her average transaction size was 81 cents lower, and fewer customers shopped her department as well. These problems, combined with slightly higher labor costs on that day, were causing the unprofitable situation.

Part of this process implementation challenges participants to experiment with ways to improve their department’s daily performance. The methods to make things better included all of the traditional tactics such as suggestive selling, signing, and in the case of a deli department, food demos and sampling. Also people were encouraged to look for new and innovative ways to make things better.

Months later, the Deli Manager arrived at session six several minutes before her fellow managers for the specific purpose of asking me a question. She said, “After I got all of my scorecards up and running I learned that I had a serious profit problem on Wednesdays. So I began to experiment with food demos. I tried demos in every part of the store, at every time of the day, with active and passive demos, and with different people doing them. Then I experimented with demos on the other days of the week, too.” She said, “I’ve tried every combination I could think of. The people in my store thought I was nuts, but I had to solve the problem.”

She took a breath and continued, “And during all of this experiment I’ve kept track of everything that happened to the numbers on my scorecards. I watched everything, everyday.”

Seeing her excitement, I asked, “So what did you learn?”

With a smirk on her face she said, “I found the best place in the store to do a deli demo that drives the most profit. And I found the worst place in the store to do a deli demo to increase profit. Do you know where they are?”

Now frankly, I had no idea what she had learned. To that point all I knew about demos is what I had learned working in stores and the experiences shared in workshops by several thousand participants. But not wanting to confess my total ignorance, I said, “With that look on your face, I’ll bet you are going to tell me the answers to your questions.”

Before I recount her answer, which I frankly did not know before she related it to me, where do you think the best place for a deli demo is? And where is the worst place? Historically we have done deli demos in the deli department and meat demos in the meat department. Also historically, retailers have done passive demos where the product is put out for people to sample without any assistance, or active demos with a person assisting the sampling.

I must concede that what may be best for one store may not be best for another store, but nonetheless, what this wise deli manager learned took me by surprise and opened my eyes to her ingenuity and creativity. This is what she told me, “When I did a deli demo in the deli department, the only customers I could reach were the ones already in the deli department. If I was lucky I could draw a few people into the department who were passing by. But mostly I only got my existing customers. So,” she continued, “I started doing demos everywhere, even in the parking lot. And on one day I did a demo for people leaving the store, just to see what would happen to my scorecards; now that’s crazy, isn’t it?”

I agreed that doing a demo for people leaving the store was, indeed, a bit strange, but it did show her determination to take experimentation to the extreme. Then, she continued, “And after three months of keeping all the records, I now know where the best place and the worst place for a deli demo. Where do you think they are?”

With no way out but to look stupid, I confessed, “I haven’t any idea. Where are they?”

She explained, “Each time I moved the demo to a different place in the store, good things happened. And each time I got lazy and did a demo in the same place it was done last time, things stayed about the same. The thing I had to do was interrupt the customer traffic patterns in the store to gain new customers. The trick is to not only sell more to each customer, but to also get new customers. And the new customers I need are already in the store, but they aren’t shopping my department for some reason. So by moving the demo to a different place in the store each time, I attracted new customers to my department. That’s how I solved my profit problem on Wednesdays!”

“So where is the worst place for a deli demo, on the way out of the store?” I asked.

“No,” she replied, “the worst place in my store for a deli demo is in the deli department, because it’s too consistent and doesn’t attract new customers. It doesn’t work for me.”

I call this lesson the Principle of the Deli Manager because it illustrates several important things. First, a manager must know what is really going on, not just what you think is going on, or what you would like to happen; second, don’t be afraid to experiment and try new, and sometimes crazy, things; third, results on a scorecard will talk, if you will listen; fourth, if you keep doing the same things you’ve always done, you can only get the same results you’ve always gotten; and fifth, it was humility, determination and creativity that enabled the deli manager to solve her Wednesday profit problem. Without those traits she would still be unprofitable on Wednesdays, and wouldn’t even know it!