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by Edward C. Lee, editor emeritus

In-Store Bakery

Customers who have moved out of state order shipments of United's thumbprint cookies.

To ensure artisan bread sales, the bakeries offer active sampling programs and informational brochures.

United's creative cake displays showcase decorators' talents and promote sales.

In-store bakery directors regularly bemoan their plight of being forced to price their fresh, value-added bakery foods artificially low to enable their stores to compete. This is especially true for bakeries operating within everyday, low-price (EDLP) formats.

To cope, bakeries cut product quality, trim selection or rein back customer service, or do all three. The result: sales fall, or, at best, remain stagnant. When bakery sales fail to respond, top management believes it still has a price problem and intensifies the pressure to reduce prices. The downward spiral begins.

Well, a North Texas supermarket chain is proving that top quality, hot bakeries can survive, yes, thrive, along side competitively priced groceries, even EDLP pricing. United Supermarkets Ltd. is doing it with its Market Street supermarkets, one of three store formats operated by the Lubbock, Texas-based company. The others are United Supermarkets combination supermarkets and Super Mercado, aimed at Hispanic consumers.

The five Market Street locations, under the slogan, "Living Well: Heart and Soul," feature gourmet prepared foods, restaurants, and upscale and conventional grocery items. The concept seeks to emulate shopping for perishables, including upscale products, in individual stores along an old-fashioned market street, while providing everyday groceries.

After entering a store, customers encounter a colorful array of open "store fronts" in the first aisle, among them a coffee and custard bar, fresh bakery, Sandwich Shoppe, gourmet grill, Italian food station, Comfort Foods Kitchen, gourmet cheese section, chocolatier, florist and book store. The store's concept includes providing organic and "whole health" products, which in bakery involves baking of organic and other specialty breads.

Market Street pursues a pricing strategy that combines high/low pricing with everyday, low prices. About 18 months ago, Market Street officials identified about 1,500 common items purchased across all departments and priced them "very competitively." The bakeries have several everyday, competitively priced products, such as 16-oz. French bread for $1.29, with additional items offering greater value and commanding respectively higher retails.

Bakery's integral role
This dual pricing approach has helped enable Market Street to enhance its goal of offering one-stop shopping, according to Mike Holt, store director at the Market Street location in McKinney, Texas, a north Dallas suburb. "We don't want to limit ourselves to only a Whole Foods Market clientele or to a conventional supermarket clientele," he says. "Our guests (customers) tell us they like Market Street because they can buy fresh organic bread and Folgers coffee."

The in-store bakery is not merely a requisite department like those in most conventional supermarkets, he says, but serves an integral role in Market Street's strategic plan. "If the store departments were pieces to a puzzle, bakery would be a major piece," he says. "When a department takes an order, bakery almost always is included. For example, if foodservice takes a catering order, it will include a cookie platter or a dessert tray. If floral is involved with a wedding, the guest will need a cake, plus a groom's cake. In many supermarkets, bakery may not even be given a second thought."

Loyal customers
Piper Dockins, field support specialist, attributes the growing base of loyal customers to the in-store's focus on preparing nearly all products on premise, many from scratch, including artisan breads, and others from mixes and frozen doughs and batters.

"Customers actually ask, 'Do you make your cakes here, or do you take them out of a box,'" he says. "When it's a product that we don't make, we explain that we don't, but that it's still good product. If the customer's not convinced, we offer an alternative item."

Market Street bakeries offer about 300 different items daily. Each bakery manager has the authority to manage his or her department as the manager sees fit to meet the store's demographics, according to Tammy Kampsula, corporate bakery director. "Of course, we expect the bakeries to carry certain product categories," she notes. "Market Street has artisan breads, Super Mercado Mexican pastries, and every store, including United Supermarkets, offers French bread. After these products, managers can select the items that will sell best."

In-stores in the three formats also share the same fastest-growing product categories: cookies, cakes and artisan breads. Cookie sales especially are increasing, Kampsula says.

Market Street bakeries have become well known for their scratch-made thumbprint cookies, she continues, adding, "We receive more customer comments regarding these cookies than any other single product. Former residents who have moved to other parts of the country contact us to have cookies shipped to them."

Thumbprint cookies are among several varieties of everyday cookies, all made from scratch. Volume of spritz, shortbread and other varieties in three Market Street bakeries grew to levels last year that required installing automatic cookie depositors. "The machines allow us to make many varieties quickly, which is especially important during the holidays," Kampsula says. Plans call for adding meringue cookie production.

Decorated cake details
Decorated cakes likely are the most visible category demonstrating Market Street's commitment to exceeding customers' expectations. Low-volume service cases display well-executed seasonal and upscale dessert cakes in whole and individual portions. A creatively designed wedding cake presentation shows off the decorators' capabilities.

The bakeries also make placing cake orders convenient. The first decorators arrive at 5 a.m. before the 6 a.m. store opening; the last decorators work until 8 p.m., before the store closes at 10 p.m. "I don't know that if we were a fully EDLP operator we could provide the high service levels that we offer," Kampsula says. "But, our hybrid approach to pricing allows us to provide those services while still offering value."

Market Street in-stores have scored particular success with decorated dinner cakes, displayed on a dedicated table, she continues. Flavors include fudge, Italian crðme, German chocolate, carrot and red velvet. Whole cakes are offered in singleand double-layer rounds, retailing for $7.99 and $11.99, respectively. Four slices sell for $3.99.

Four-slice packs are the largest-selling cake product, Kampsula says, explaining that they appeal to small families, are easy to serve and are priced right. Chocolate fudge and carrot are the best-selling favors.

Eighteen months ago, Market Street introduced artisan bread production. Each morning, an artisan baker mixes 12 different doughs, using a natural sour starter, to prepare 14 to 15 products. Some varieties, such as ciabatta and baguettes, receive four hours' fermentation and are baked the same day; others, including French country, containing whole wheat flour, receive 24 hours' fermentation before baking.

The most popular varieties are ciabatta, French country and baguettes. The bakeries plan to introduce fruit and nut varieties this year. The specialty bread line also includes four organic varieties, country Italian, roasted garlic, multigrain and sesame semolina, all par-baked items. On average, 16-oz. organic loaves sell for about $1 more than their conventional counterparts.

"Interest in organics no longer is limited only to people concerned with their health," Holt observes. He adds that media publicity has attracted a broader base of consumers. The company also is promoting organics with in-store demonstrations and food expos. "When we opened the store, no one was asking for organic products," he recalls. "Now, 80 percent of customers who buy our organic sourdough do so because it's organic."

Currently, Market Street in-stores' organic offerings are limited to breads. Kampsula says. She is seeking sources for organic muffins and a few sweetgood items.

She attributes much of the artisan breads' success with informing consumers about the breads' attributes and educating bakery employees to sell the products. A four-color brochure provides consumers with detailed descriptions of each bread product and serving suggestions, such as which breads, wines and cheeses best go together and which varieties work best with specified salads, pasta dishes and sandwiches. The brochure also briefly describes how bakers make the breads from starters on premise and how to store artisan breads effectively at home.

Bakery employee training includes a section on selling artisan breads. Also, each bakery uses the company's bread brochure to help educate employees and consumers.

"I knew artisan breads would sell because the flavor is great," Kampsula says. "Still, the education process was huge, and the start-up costs were not small."

Product sampling key
Dockins recalls that the initial shrink was 20 percent for the first three months. "We sampled, sampled and sampled some more," she adds. "We tried to have every customer sample the bread."

Product demonstrations and active sampling have underscored the educational efforts and, thus, have helped drive sales of breads, cookies and decorated cakes, Kampsula says.

Less than a year ago, United Supermarkets Ltd. launched a company-wide sales and sampling program, using dedicated employees trained to conduct product demonstrations each weekend. "These demonstrations promote 'fresh' and 'scratch,' that is, items we make in our bakeries, to convey a quality image," she says.

Besides having demonstrations in the bakeries, they supply products to accompany demonstrations in other departments. For example, they provide baguettes for cheese or pasta demonstrations. "All the departments benefit," Kampsula notes. "We're trying to tear down the walls that sometimes exist between departments." To date, about one-third of the company's stores participate in the program.

Customer connection
"You cannot be concerned with how much product you're giving away, within reason," Dockins continues. "You'll get it back and more if you offer a top quality product and hand it to a customer with a smile, not just leave it in a tray to be picked up. You'll get their response immediately. Since we started the sampling, sales have quadrupled."

Consumers' continued interest in healthful foods and the company's bakery capacity to help fill those needs has spurred Kampsula to seek additional products, such as gluten-free bakery foods.

She believes that filling consumers' special needs, in addition to providing top quality products and customer service, will encourage customers to patronize the company's supermarkets specifically for their fresh bakery foods. "I'm a firm believer that the more customers that visit a store, the more sales a bakery can make," Kampsula says. "However, I also believe that an in-store bakery should become a destination bakery."

Achieving that status would make the best statement for the ability of a top quality, hot bakery to operate in nearly any supermarket environment, including an EDLP format. By all accounts so far, Market Street's in-stores are on track.

Market Street . . .a sampling of prices Glazed, yeast-raised donut......... $0.50 Blueberry muffin, 41/2 ozs. ......... $1.99 Plain bagel......... $0.69 Butter croissant, 21/2 ozs.......... $0.99 Cinnamon roll, 3.8 ozs. ......... $0.50 Decorated thumbprint cookies, 12 count ......... $3.29 Gourmet cherry pie, 9-in. whole ......... $7.99 9-in. 1/2 ......... $3.99 Fresh fruit-topped cheesecake, 8 ins.......... $17.99 Angel food cake, 16 ozs.......... $3.99 Crème cake, 19 ozs.......... $3.99 Fresh fruit-topped tres leche cake, 8 ins.......... $13.99 Decorated cake, 1/8 sheet ......... $8.49 1/4 sheet ......... $14.99 1/2 sheet ......... $21.99 Organic breads: Multigrain, 16 ozs. ......... $4.49 Sesame semolina, 16 ozs......... $3.99 Roasted garlic, 16 ozs. ......... $3.49 Artisan breads: Baguette, 14 ozs......... $1.49 Ciabatta, 12 ozs.......... $3.49 Whole grain, stone ground wheat bread with flaxseed, honey, 16 ozs. ......... $3.99 Pumpernickel, 16 ozs. ......... $2.99 Whole wheat bread, 16 ozs. ......... .$1.99

Market Street.................at a glance Headquarters: Lubbock, Texas Founded: 1916 by H.D. Snell; under fourth generation of family ownership Management: Dan Sanders, chief executive officer; Wes Jackson, chief merchandising officer; Tammy Kampsula, bakery director; Piper Dockins and Gary Bittiker, bakery field support specialists Store names: United Supermarkets, Market Street, United Super Mercado Market served: North and West Texas Number of stores/bakeries: United Supermarkets, 41/27; Market Street, 5/5; United Super Mercado, 3/3 Store/bakery sizes: company average, 40,000 sq. ft./ 2,150 sq. ft.; Market Street, 62,000 sq. ft./ 3,500 sq. ft. Number of bakery employees: Market Street, McKinney, Texas, 19 Production methods: scratch¯artisan breads/rolls, cookies; mix¯cake rounds/sheets, cheesecakes, crðme cakes, brownies, angel food cake, pound cake; frozen par-baked¯organic breads/rolls; frozen raw¯crusty/variety/white breads/rolls, gourmet cookies, pies, bagels, croissants, muffins, cinnamon rolls, and puff and Danish pastry Major equipment: vertical and spiral mixers, sheeter/moulder, semi-automatic rounder/divider, baguette moulder, automatic cookie depositor, manual cookie depositor, roll-in proofer, rotary rack oven, revolving tray oven, computerized decorating machine, bread slicer, walk-in refrigerator/freezer Plans: begin construction in February of a multi-million dollar supermarket in Graham, Texas, with a hybrid concept that implements characteristics from United Supermarkets' conventional format and the Market Street concept; under the United Supermarkets banner, the store will emphasize specialty grocery offerings and fresh foods, including an upscale in-store bakery.