Top in-store bakery executives share tips and best practices for generating sales and profits in the mostly impulse oriented bakery market.
In the midst of a presidential election, discerning the truth can be difficult. But for in-store bakeries, the truth is that business remains difficult as consumers remain mindful of spending and commodities bear watching as a drought will likely cause a spike in prices. This summer, Modern Baking gathered several in-store bakery executives to share their tips for upping traffic and boosting sales. The roundtable sponsor was BakeMark, and following are excerpts from the discussion.
Modern Baking: With the ongoing economic recovery, driving traffic into in-store bakeries is critical. What is the atmosphere right now in supermarket bakeries?
John Rose: Our traffic count is up. As the economy began to slow, people moved out of the restaurants and into the grocery store. Any time traffic count increases in a grocery store, it’s to the bakery department’s benefit. We’ve enjoyed some increased business just because people went back to cooking.
Tony Byington: I think that business is difficult. We have to get more creative than we ever have in the past, and we have to come up with promotional opportunities to draw customers. Also, it’s been difficult to draw customers to the bakery because I think from a customer’s perspective the identity of the supermarket bakery is a little bit challenging. They’re not sure what in-store bakeries are anymore. Do we make product on site? We need to find a way to tell our customers who we are, what we produce and what we don’t produce, so they know why they’re coming to us and what they’re coming to us for.
MB: Due to the challenging environment, have you changed your promotional strategies at all?
Steve Lugar: When we run a special, like $2.99 for 6-ct. donuts, we have to really merchandise the rest of our products to try to get the customer to buy some of those products along with the cheaper products. I think they’re more price conscious than they were a few years back.
Steve Schulte: We started putting just one flavor of a product on sale and merchandising all the other flavors with it. We didn’t get any pushback from the customers, and we didn’t lose sales on the other ones. We focus on one flavor now, and they’ll pick up another flavor with it. It still gives us the extra sales at retail.
Rose: We started “Of the Month” programs last year, and that’s worked well with 8-in. single layer cakes. We started promoting one variety for an entire month. Then we came up with Cupcake of the Month. The cakes aren’t new, the cupcakes aren’t new, but just a little promotional spin made a difference.
Schulte: We’re doing the same thing with our Cake of the Month that is always a cake not part of our main cake category. [In June, we offered] an orange creamsicle cake. At the end of the month that variety goes away, and we bring in a new one. Customers like to see new; it has that draw, that appeal to customers. You just gave them the reason to buy.
MB: What are you seeing in regards to product size?
Scott Fox: We’ve been selling a seasonal product, Mary Jane shortcakes, for ten years and always made them in a 6-oz. portion packaged in a 2-ct. clamshell that retails for $3.29. And this year, by accident, the first batch came out kind of small. We packaged them in a strawberry pint basket with paper nestled in the bottom and bagged them. We lowered the price by 40 cents and had a buy two for $5. And product sales have increased five times. We sell this product until September, and we’ve already sold more product (by mid-June) this year than we did all of last year. The customer feedback I’ve heard is not so much that they liked the price but the smaller portion.
Rose: Our pie category was flat, so we added “personal pies” in 4-in. and 6-in. size. With demand for smaller portions, it was a major home run. We were trying to survive on 8-, 9- or 10-in. sizes. That’s fine for holidays, but post-season, sales just weren’t there. We just got stuck trying to drive a category all year with seasonal product.
Ken Downey: We came up with a dessert-for-two category. We brought in 6-in. pies, as opposed to buying 9-in. pies, and 4-in. cakes instead of 8-in. cakes. They’re just selling like crazy. The problem is instead of getting the $16.99 ring for a larger cake, now you’re getting a $6.99 ring for a smaller cake when you’re selling the same amount of cakes.
Jennifer Dahm: We actually sell quite a lot of half fruit pies and half cream pies. But our strategy is: If it’s a half, it’s 60 percent of the full price.
Schulte: We had 8-in. cake lines for years and we added a 5-in. cake line–the goal is to add new customers to make up for fewer dollars. We’ve actually seen an increase in customers coming into the bakery over the last year.
MB: Have you increased or started cross promotions throughout the store to help draw customers to your department? What are you doing storewide to attract customers?
Lugar: We have one item that we put out on a “wow” display outside of the department. Something that is going to draw attention.
Byington: We expect every store to get out of the bakery with that one item. It has a third of a page in the print ad, so it’s very exaggerated. Every store is expected to find any place in the store–an end-cap, a high traffic spot of some sort–and display that one item just to give it greater emphasis.
Downey: We do two things. We have a GTI program–gourmet tie-in. Every week, every department submits two or three items, and the program director picks the items that we’re going to use the following week. If we’re promoting Brie, we might put baguettes in the cheese department. And in bakery, specifically, we do a push item of the week. We pick one item at regular price that is a high gross profit item, then merchandise it in different places throughout the store.
MB: What consumer trends are influencing your product lines?
Byington: In the commercial aisle in our stores, whole grain products are 30 percent of the hotdog, hamburger and sandwich bread sales. And we don’t have it at all in the bakery. We think that’s a huge opportunity so we’re moving hard in that direction.
Schulte: We added a line of whole grain breads last year and had all seven varieties certified with the Whole Grains Council stamp on them. We looked at what was going on in the commercial aisle and how much whole grain was selling over there. It’s been a really slow transition to get customers to buy it because it’s such a different quality of bread. They’re buying sandwich bread in the commercial aisle that’s a softer bread than the more artisan-type bread we make. It’s constantly growing; it’s just not as fast as we’d like to see it happen.
Downey: For us, organics are just going crazy. We have a company manufacture a par-baked organic artisan bread for us in five varieties.
Fox: We’ve been experimenting with sprouted, organic whole grain. It’s a little bit different. It’s expensive to work with, but we’ve created a reliable customer following. We’re doing a pan bread–whole and half loaf–and a hamburger roll and dinner roll.
MB: Are you seeing a lot of demand for local, either local ingredients or baked locally?
Lugar: They know that we’re baking it in store, but customers want to know if we’re actually making it here. And to me, that’s the biggest success in our Baking Stone bread line is that we’re actually mixing it, prepping it and baking it right in the store.
Rose: Our product is fresh baked in the store. We really worked hard to tell the story that we roll out fresh baked right here and customers get it fresh.
Fox: In the bakery, of course, our flour is not local. But we’re making this wonderful artisan bread from scratch. We decided if we’re making it from scratch in-house, we’re going to call it local.
Byington: I don’t hear much about local ingredients. But I do hear about what are these ingredients in your ingredient statement? What are these additives? They want a simpler ingredient list. They want fewer additives and fewer preservatives.
Schulte: They are definitely asking for cleaner ingredients. Our sugar-free pie had filling with aspartame in it. And the customers were saying, “I really don’t want that.” The manufacturer took the aspartame out, and we actually ended up with a much better tasting pie.
Downey: Local is big for us. I send a truck into New York City every morning to pick up bread from six different bakeries. Our customers love it. We don’t try to hide the fact that we don’t bake this here or pretend to bake it here and sell somebody else’s. Customers know we bake our pies, croissants and cookies. Everything else, we buy either fully prepared or frozen, but we brand it as who made it. It’s a pretty good concept. We started about five years ago, and it’s been working great.
MB: What new marketing strategies have you had to adopt since the recession and the rise of social media?
Jannette Payton: We have a corporate Facebook page and Twitter account, and most stores have their own Facebook pages. I post weekly or monthly ideas that customers can get at any Hy-Vee, whether it is a special item or just re-promoting an ad item. The Hy-Vee cake designers have their own Facebook pages.
Schulte: Facebook has been huge for us. Every time we’re introducing a cake or new dessert or anything in bakery, we’re posting it. And then we’re getting feedback from customers. When one customer starts talking about it, it really helps drive new cake sales.
Downey: Our sales signs have QR codes. You click on the code, and it will give you a recipe or ideas on what to pair with the product.
Schulte: We do QR codes with our whole grain bread program. We had our nutritionist develop a sandwich program to go with the whole grain breads. When customers scan the QR code, it tells them how to make some healthier sandwiches using the whole grain breads.
Payton: Almost all of Hy-Vee’s stores have chefs in them now. And they have helped out greatly by preparing food so people can see and taste. That’s helped us tremendously in the bakery.
MB: Is your bakery department using loyalty cards to track customer purchases and market to them directly?
Rose: We have a loyalty card with an app for your smartphone, and it shows the points you’ve accumulated. It’s got a personal QR code that customers scan at the register instead of using a loyalty card. We have a program for our Yums cupcakes and caramel apples where if you buy six, you get one free. It’s all auto loaded. So as customers scan their loyalty card, it’s keeping track. When that day comes and they get that seventh item, it just tells them, “You get this free.”
Fox: We’re going to do a point system with the club card. Customers will earn points on high-margin items. It’s going to be good for the bakery because signage will tell customers how many points they’ll earn, like a loaf of bread is 100 points and a half loaf is 50. For a Killer Brownie, you’re going to be able earn 200 points. And then you’re going to be able to use those points on ridiculously cheap items. We try to identify the top 12 or 13 items that people buy the most often, like bananas, milk and ground beef. Customers are going to be able to get all natural, antibiotic- and steroid-free ground beef for 99 cents a pound if they earn 500 points. We’re pretty excited about it because people can make purchases in the bakeries or in the deli–on the perimeter of the store where we’re making the margins–and then they can use them on things that they buy every day.
Rose: We just launched a program called “Your Points,” which is a thank you card. They accumulate points and get more bonus points on certain items. And then they can apply them to gasoline at our gas station. It can be as much as a $1, $1.50 off per gallon, if they accumulate select points. But they can use them for all kinds of things. They can use them on food purchases, gasoline or whatever.
Lugar: Not every Hy-Vee store has a gas station but ours does, and we run what’s called a “Gas Buster.” There are usually 20 items in it, and for each one of those different items the customer buys, he can save 5 cents per gallon.
Byington: And bakery is always at least one of those 20 items.
MB: What is the best lesson you’ve learned in promotions or marketing?
Schulte: Bakery is an impulse. So it’s giving them a good reason to buy, whether it’s something new or around holidays. We’ve been tying into a new holiday each month. June was National Donut Day, and we took advantage of that. In January, it was National Chocolate Cake Day. We sold thousands of cakes, not on sale, but just because it was that day. It’s giving customers a reason to buy. We have to give them that excuse to be able to say, “I bought this because it was National Pina Colada Day.” So we have 12 new holidays for them to buy around. I think in bakery it’s not so much give them quality but give them a reason, and they’ll spend the money. Again, you can’t just go crazy on the price but give them a perception of value.
Byington: Don’t be afraid one to three days a month to advertise aggressively. And by aggressively, I mean, at a break-even or even a little bit of a loss on something to let customers know, don’t forget about us. We’re still here. Because you’ve got the other 27 days in the month to blend back out of that. You’re going to be perfectly fine by the end of the month.