Left to right • John Rose, category manager-bakery, Brookshire Grocery, Tyler, Texas • David Morris, manufacturing facilities manager, Brookshire Grocery, Tyler, Texas
Left to right • Pam Rains, outside sales manager, Brookshire Grocery, Tyler, Texas • David Hay, bakery buyer, BJ’s Wholesale Club, Natick, Mass. • Diana Sanford, bakery buyer, BJ’s Wholesale Club, Natick, Mass.
Left to right • Bessie Drakodaidis, assistant bakery buyer, BJ’s Wholesale Club, Natick, Mass. • Doug Poling, senior marketing director, nonperishables, bakery & coffee, Bristol Farms, Carson, Calif. • Bill Mihu, vice president, bakery, Schnuck Markets, St. Louis
Left to right • Steve Schulte, bakery director, Giant Eagle, Inc., Pittsburgh • Scott Fox, bakery director, Dorothy Lane Market, Dayton, Ohio • Jennifer Dahm, bakery manager, Dorothy Lane Market, Dayton, Ohio

News on the economic front has been anything but uplifting recently, and fatigued consumers are continuing to watch their spending. While bakery, as a small indulgence, is often seen as recession-proof, this latest economic slump has taken a larger toll on the industry than others in the past. However, customers will still buy if perceived value and product cost align.

This summer, Modern Baking assembled several in-store industry executives to discuss their methods for drawing customers into their bakeries and offer tips for generating sales. The roundtable sponsor was BakeMark, and following are excerpts from the discussion.

Modern Baking: In light of the slow or even stalled economic recovery, what are you doing to keep customers coming to your bakery?

John Rose: We’ve really focused on fresh baked–that resonates well with customers–which moves people into our stores, and foot traffic for a bakery generally translates to sales. We’ve seen increased foot traffic, and fresh baked has been a critical piece of attracting and keeping customers in our bakeries.

Doug Poling: Our theory is put out a great product, provide a great environment and great customer service, and charge what we need to charge. What we’ve been trying to do over the past year or so is redefine value–differentiating between expensive and something that costs a little more, but is of value. It seems to be resonating well with our clientele. We’ve actually changed our economic model a little bit with lowering some of the margin and contribution expectations. Our customer traffic is up enormously. We’re really doing a lot of value plays in every category. We bring them in with that, and then try to trade them into or trade them up to some other more margin-friendly items.

David Hay: As a club format, we’re starting to focus more on a weekly shop rather than the monthly stock up. Some of the pack sizes have been adjusted down. Eighteen packs are now 6- and 12-packs, and in allowing our members to come back each week, recognizing shared wallet is an important factor. They only have so much money per week. So, trying to drive more trips back to the club has been a big focus for us.

MB: Have you changed your marketing strategies at all to get customers into the bakery?

Rose: We’ve just launched the “You Save” program and the signage shows the regular price versus ad pricing and how much you save. It puts it right out there.

“We’ve done a lot more with deep discount promotions in bakery.”
— Steve Schulte

Steve Schulte: We’ve done a lot more with deep discount promotions in bakery. Not doing sales on so many items, but just really focused on a few with a deep discount. Customers are wowed when its $2 or $3 off. That catches their attention, and they don’t notice the pricing on some of the other items in the department or pay as much attention; they’ve already got the bargain.

Bill Mihu: I think people are looking for comfort food and they want value. And that means different things to people. One of the things we did was we came out with a donut of the month program. It’s an indulgence item, and it’s all about taste. We did it with our existing SKUs, but it was about different decorations or toppings. What we also did is try to look at some key categories and offer quarterly specials on new products. We found that a month was too short. We came up with some quarterly promotions, especially in our muffin category, like our 4-count muffins. A few of the items, our customers liked so well that we’ve introduced them as part of our everyday lineup.

Poling: When an item comes off of a deep promo, we will actually slide it into a lower promotion prior to going back to regular retail to try to avert that sticker shock of going from 50 percent off back to regular retail. We’ll build that into the markdown plan for that particular promotion. We’ve had some decent success with it. We’ve gone deeper on discounts, really to try to bring folks in, so when you give them that taste and then move back more gently toward the regular retail, they seem to appreciate that. Once we get a product in their mouth, there’s a high probability that they’re going to come back and purchase again, but we want to soften that blow if we really have taken the initial deep discount to get them to try that product.

MB: Toward the points of providing value and deep discounting, how are you directing customers to the products that are a little bit more profitable for you?

Scott Fox: At Dorothy Lane, artisan bread has been really strong. It’s made us a destination. We made a commitment 15 years ago that what we bake today, we sell today. We’re not trying to get a couple days out of it, and we never discount it. We started offering half loaves of bread and 4-count buns. For our customers the price isn’t really as much of an object as value. We provide service for every loaf of bread we sell–any size can be sliced. We charge 65 percent of the retail for a half loaf for that extra service, but customers don’t mind because they don’t want to waste bread.

Jennifer Dahm: A lot of times, we end up selling two halves to the same customer. They may buy a half loaf of wheat bread and a half loaf of white bread. Everybody is happy, and the bakery makes more money.

Fox: Or they’ll get a half loaf of their staple, like the wheat or the white, and then they’ll get a half a loaf of that $7 Asiago cheese or raisin walnut bread that is the treat for the weekend.

Rose: We’ve been experimenting with a Cake of the Month to drive our cake category. We offer a cake variety for a whole month at a pretty good price, low enough to really get customers’ attention. It has brought people to the bakery and reintroduced them to the category. It’s a great value. We’re hoping it segues to other cake purchases like custom cakes and so forth. It’s working.

Dahm: We’ve seen some success with single-portion cakes. We started cutting full sheet cakes, just icing them with plain decoration. Usually it’s just a fondant flower on each portion; cut them, package them, and put them in the to-go case. It’s just very simple, but people really are buying it.

Fox: It’s an easy way to make $70 per sheet cake, and all you have to do is ice the top.

MB: How do you find the balance between value and price?

Fox: We don’t try to get them in on price on anything in the bakery department; we really don’t. But we’re constantly creating new items, and we know that those new items have to have integrity if they’re going to sell. Customers will buy them once, but if the integrity is not there, they’re not going to buy them again. We will price it what we have to price it to make our margin. Sometimes you make a product and could get even a little bit more for it; we’ll take advantage of that, if we think that it’s got a better perceived value than the margin. For us, in the in-store bakery, we don’t drive it with price.

Mihu: I think value encompasses a lot of things. I think it encompasses freshness, retail and the quality of the product. The first criteria is just quality. We still fry donuts. We think that’s the way to go. So, from that price point, I’m appealing to someone who is price conscious. They can have a treat, a donut. And I’m also selling cakes and other pastries and artisan breads. So, I have a value proposition from one end of the spectrum to the other in my bakery, so the guest will choose what that is. But I don’t think, given commodities and pricing, anybody wants to touch their quality. That’s the cornerstone of their business. It’s a very slippery slope once you start to try to save costs because that will just kill your business.