|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.
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.
MB: Are customers asking for more healthful or diet-specific products?
Dahm: Trans fat-free.
Fox: Whole grains.
Fox: We started buying product from a local gluten-free bakery a couple years ago. We put it in fresh bakery with a mindset of we’re not going to make a lot of margin. We make, maybe, 30 percent on it. We’re keeping it in a refrigerated case. I would say we probably sell about $3,000 to $4,000 worth of gluten-free products a week in three stores, so we’re not making a lot of money on it, but we’re satisfying the customer and that’s the way we’ve combated it. I’d still prefer to not have it in the bakery department.
Dahm: We have these flourless cookies that just taste like the top of a brownie and they sell like crazy because they have a gluten-free sticker on them. We have a sticker that says naturally gluten-free, so we’re not claiming that it is made in a facility or anything like that.
Schulte: That was going to be my one warning to everybody. Be very, very careful about what you put gluten-free stickers on because a lot of companies out there are starting to produce gluten-free in a nondedicated facility.
Dahm: At one point, we would not open the gluten-free bread in our facility, but customers were asking me to slice their bread. We came to a compromise where we explained to them that it would no longer be guaranteed gluten-free, and we crossed the gluten-free off the label. Some people aren’t as sensitive, and they just want it sliced for convenience. It’s a very complicated situation.
Schulte: We actually have a separate sticker. So, when they want it sliced, it is just the name of the bread and doesn’t say gluten-free on it. That way we cover ourselves. If we had to slice it or do something, then the label wouldn’t say gluten-free on it at all; it is a totally different label.
Rose: We’ve moved into gluten-free, too. You’ve got this very small segment of the population that has celiac disease, but we did studies and found that about 10 percent perceive it to be healthier or just prefer that type of bread. We’re seeing slow, gradual growth.
Schulte: The best way to build a gluten-free business is to work with the local celiac support groups. In every city, there are a number of support groups out there. Have them come into your store. You can do a tour and show them what products you have. It’s inviting the business in.
Dahm: We do that. We have the DLM gluten-free food lovers club. It meets monthly.
Fox: That was generated by one of our associates who has celiac. She actually heads up the celiac group there, so we have a school of cooking and she holds the meetings there. That’s really the generator to drive that business.
MB: Are you seeing demand for clean label or allergen-free, dairy-free, egg-free?
Schulte: I think the clean label is becoming more important. Customers want products with ingredients that they could find in their pantry at home. If they have it in their pantry, then it’s okay. Not too many customers have high fructose corn syrup sitting in their pantry at home, but they have regular sugar. That’s really what I think the customers are looking for are cleaner labels.
Diana Sanford: We’re focusing more on healthier options, so all natural plays a big part. Our artisan breads are all natural. Also, we do a lot of portion control and minimizing waste. We’ve downsized where it makes sense. So, we offer 6-pack muffins now, although we are a wholesale club, and we have changed our packaging to single-loaf breads.
Fox: For clean labels, we’re not there yet, but it’s a high priority for us. Anything new has to meet that now. We have a lot of things we’ve been making for years and it’s hard to take those away from customers. We’ve cleaned our labels up a lot, but we have a long way to go. We tried to get clean labels on decorated cakes, and we just ruined our cake business. It’s taken a year and a half to get back.
Mihu: It goes back to that indulgence and it has to taste good.
Sanford: We have an acceptable ingredient list that we have to abide by. Right now, a lot of it is no high fructose corn syrup and zero trans fat. We’re trying to get there, but it’s challenging.
Dahm: It’s sort of interesting looking at gluten-free and clean label together. Consumers want gluten-free, but if you look at a lot of those labels, they’re long and they have a lot of junk on them. So which is more important?
MB: Along with the clean label trend is sustainability. Customers want low carbon footprint and are buying local. What are you doing to address this?
Rose: We’re looking at different packaging that’s more recyclable to eventually replace our clamshells. It has a lower carbon footprint. It’s been an initiative of our C.E.O. as a company, so we’re moving in that direction. It’s a slow process.
Mihu: I think sustainability has not been defined enough; it’s become so broad–everything from labor and not training people, trying to reduce turnover can fall under it. I think of it more as recycling and carbon footprint, but I’m hearing people who have very, very broad interpretations of sustainability.
Rose: We actually have a director of sustainability who finds ways as a company to reduce. He sent me a multi-paged review of everything we’re doing with electricity use, water usage, applying for certification and the decrease in cardboard usage. We’re moving towards composting, all these things.
Mihu: It’s really a good business practice, and there’s no doubt there’s nobody who disagrees that there should be a focus on sustainability. It’s about what does it mean to your company, how do you articulate it?
Schulte: I think companies are going to be forced into it. If you look at recycling, who’s doing it? It’s the younger generation. It’s something that, in our generation, we actually are learning how to do or to remember to do. They’re coming to the stores now, and they’re starting to ask for these different things. So I think they’re going to force all of us to become more sustainable with our packaging and coming up with new ideas on how to be greener.
MB: With the latest census data from last year, one of the largest growing demographics is the Hispanic population. Are you seeing a need for Hispanic or ethnic products and how are you meeting it?
Bessie Drakodaidis: At BJ’s, we’ve definitely looked into the idea of a Hispanic line. Asian, as well; it’s another growing population.
Hay: Building off of that point, though, it has to make sense in the right club. So, you have to look at your demographics. We’re in 15 states, so upstate New York isn’t going to get that same allotment of those items as Florida, so you have to do your homework.
Mihu: We don’t have a big Hispanic population. St. Louis has higher Bosnian and Korean populations. We carry some bread from a local Bosnian bakery. They’re much more comfortable with that. If I put the same bread in my packaging, they wouldn’t have the same comfort level.
Hay: It goes back to the old adage of knowing your customer. You have to have the right mix in the right stores.