Since supermarkets began adding bakeries to the their stores, retail bakery owners and in-store bakery directors have been in competition–fighting for the same dollars. But that may be changing.
Ken Downey, director of bakery sales and merchandising for the 24-unit Kings Super Markets, based in Parsippany, N.J., is the incoming president of the Retail Bakers of America (RBA), only the second in-store bakery director to head the association. He will be instated during the Atlantic Bakery Expo, March 18-19, in Atlantic City, N.J.
Downey is fostering in-store/retail partnerships by offering products from several different area bakeries in all of Kings’ in-store bakeries to the mutual benefit of Kings and the retail bakeries.
The relationship between retail bakeries and in-store bakeries has not always been harmonious. Can they work together to improve both markets?
From the late 1970s through the early 1990s, the point could be made that the supermarket chains hurt the retail bakery. All of a sudden, every supermarket chain in the country was adding in-store bakeries. Supermarket owners loved it–they finally had a draw to get customers in. They were selling fresh baked hard rolls for 99 cents a dozen and 7- or 8-in. round birthday cakes for $7.99 each. This was really hurting the retail bakery owners who were selling hard rolls for 25 cents each and a round birthday cake for $15. Even though the in-store bakery was only contributing 2 to 3 percent to the store’s total sales, it was 2 to 3 percent at 55 percent gross profit when the rest of the store was only generating 20 percent. Plus, the customers loved it; they could do all their shopping in one place and eliminate an extra stop.
As it turns out, the in-store bakery really helped the retail bakery owners evolve–sort of a survival of the fittest. The retail bakeries of today are becoming experts at what they do, realizing that they can’t be everything to every customer, and supermarkets have begun to capitalize on this. You can’t bake brick oven Italian bread in a rack oven. So, if a supermarket wants to sell authentic, quality Italian bread what does it have to do? It has to call the retail bakery owner who specializes in hearth baked breads. The majority of in-store bakeries are not going to make real butter cookies; they are going to buy them as well. These are just a couple of examples.
How have Kings’ in-stores incorporated retail products?
About five or six years ago, we made the decision at Kings that led us away from buying many things from the same supplier. Now we source the best quality from many different local bakeries and purchase from them. I buy the best of the best from many different retail bakeries.
There are still plenty of retail bakeries out there that really don’t want to have anything to do with the supermarket. But some have an open mind and have made a decision that instead of making a dollar on a loaf and selling 10 in their store, they can sell to supermarkets and maybe make 50 cents but sell 40 loaves.
Are the products you buy sold to customers in the retail bakery’s packaging?
Yes and no. Some of the products don’t have packaging because I buy in bulk, but when I put my scale label on it, I’ll put the bakery’s name on the product. I won’t buy something from somebody and try to call it my own. I’ll still give them the credit because the vast majority of retailers that I buy from have name recognition, and it’s to my benefit to use their name.
So Kings’ customers are aware the products are from retail bakeries?
Yes, but I don’t just buy anything from them just because the bakery’s famous. I only buy products from bakeries because they make the best. I don’t care if I buy from 30 different bakeries, as long as I’m buying the best thing they make in each bakery. I want to offer my customer the opportunity to buy the best.
Would you buy a product that you could produce but the retail bakery offers an extremely popular version?
If I can produce it and I can produce it well, then I’m going to produce it. I buy pies from a pie company that I’ve tweaked to my specifications, and we call them Kings pies. I buy them raw and bake them in-store. It’s the best pie in my marketplace. But if somebody made a great pie, would I buy their pie? I don’t think so. I think my pies are better than most. If there’s something I can do, I think I want to do it. But in a supermarket, you’re limited. Everybody would agree with that. You’re just limited on what you can do. I’d be very surprised if there was a supermarket chain the country that was making butter cookies themselves. They’re just something that you buy, because they’re so hard to make.
In the center store, wholesale bakeries often take back unsold product. Does it operate similarly in the in-store bakery?
It’s 95 percent once I buy it, I own it. I do have a couple of bakeries that do take back the stales, but they’re the vast minority. It’s usually all mine.
Are retail bakery products available in all 24 of your bakeries?
Yes, every one of my stores has the same program. I get a lot of phone calls from bakeries who want to sell me product. And the first thing I say is that you can’t sell just one store, you have to be able to sell to every single one of my stores. And 90 percent of the time they can’t do it.
How is the program working? Is it something you think other in-stores should take advantage of?
It’s been working out well, and no, other supermarkets in my area shouldn’t do it! I think that if a supermarket company doesn’t have a relationship with retail bakeries, they’re missing out, and if a retail bakery doesn’t want to get in a supermarket, they’re really missing out. There’s room for both and both can help each other.
To switch topics, as the incoming president of RBA, what do you hope to accomplish during your tenure?
I want to be visible and get out there. I want to put a face on RBA and I want people to know what it’s about. And if people aren’t involved, I want to know why so that we can change more of what we’re trying to change already to make it better.
I am planning on attending as many RBA local affiliate bakery association meetings and shows as possible throughout the country. I want to let everyone across the country know the benefits of being an RBA member. If they are not a member, I want them to explain why. Feedback at this crucial time can only help us grow.
What types of bakeries is RBA targeting to become members?
Everybody really. The RBA is an untapped resource for the in-store bakery. Traditionally, supermarkets just don’t get involved with it, but I’m going to try to change that. I’m going to make it my business to get some supermarkets on the board and really involved with the RBA.
What does RBA offer that might be appealing to in-store bakery directors and their companies?
The affinity program, especially, which can save corporations so much money. It’s unbelievable. Plus for the bakery director, there’s just untapped resources, networking. There have been plenty of times when I needed an answer to a question, and I sent out an email and within 15 minutes I had 10 different opinions from different people. It’s just fantastic but nobody knows it.