It is no secret that the current economic condition is one of the worst since the Great Depression. While economists agree the recession is over, the job and housing markets have yet to recover, leaving the populace feeling uncertain about the future. This feeling of uncertainty has led to more frugal shopping patterns for a sustained period of time.

Bakery historically has been recession-resistant, but the sustained consumer frugality is proving taxing. Modern Baking gathered several in-store bakery executives from different geographic areas to share the methods their companies have employed to gain sales and retain profits from increasingly thrifty consumers. The roundtable sponsor was BakeMark, and following are excerpts from the discussion.

Modern Baking: We’ve experienced some tough economic times in the last two years. What changes have you seen in your customers? Has their shopping philosophy changed? Has your philosophy changed?

Roland Krueger: We’ve seen a lot of people looking for comfort foods–donuts, pound cakes and that kind of thing. They still find that bakery is an affordable treat. You can buy donuts and cookies and it’s not going to break the bank.

MB: Are they buying the same size of products, or are they buying smaller quantities?

Krueger: A bit of both. You have empty nesters or people who want smaller serving sizes–one and two pieces. Cake slices do well for us in a two-pack serving. We also recently brought on board larger cookie portions that sell in a 24-count transparent cake dome. We make our own cookies, and we do soft, round, trans fat-free cookies, but the price for two dozen cookies, which is more than a dozen obviously, hasn’t deterred customers. They have perceived them as a value. We actually named them Value Pack Cookies.

Steve Schulte: We definitely saw that the portions have changed. Consumers are still eating bakery foods, but rather than have waste, they buy smaller portions. But it looks like they are coming back and buying them more often. Before, somebody would come in and buy a cake, take it home and toss some. Now, they’re buying the smaller cakes, but they may come back twice a week instead of just one time. We’re still the one affordable department in the store where prices haven’t changed as drastically as we’ve seen in other departments.

David Hay: We looked at a lot of our bread sizes–we were making 20-oz. loaves and other size loaves–and we saw a drastic decrease with customers not wanting to throw out any of a loaf that they spent $4 or $4.50 for. We’re making a smaller size at 12 or 14 ozs., and we’re seeing increased unit sales, but the dollars are the same. It’s more frequent shopping trips, but they’re buying less.

Amy Fouks: One of our big successes is the half pies to get that retail price point down. Our pie business has gone through the roof. We do the same with pudding cakes. Half-sizes have been very successful for us.

Schulte: We sell half pies as well. People still buy the whole pies, but what’s interesting is how many people pick up two half pies. They’re still getting a full pie, but instead of arguing about flavor, they get both. Also, they won’t have any waste.

Krueger: We changed our merchandiser to accommodate half pies, individual pie slices and pie cobbler, which is just a more generous piece of pie. Now customers can address the individual dessert needs of the whole family by picking individual ones. Their overall spending has increased, but they’re not wasting product.

MB: According to Modern Baking’s recent In-store Bakery Survey, customer counts and ticket averages in the bakery seem to be down. Are you experiencing something similar?

Schulte: In the past few months, it’s picked up. November to March it was still slower.

Krueger: We’ve actually seen our average sale per customer go up, and a lot of that might be attributed to us giving our store leaders more information, like average sales per customer, customer counts and sales at comparable stores. Since we only have 13 stores, it’s easy to give everybody information on last week’s sales. We put more information on our Intranet so everybody has access. We’ve been telling the stores to interact with the customers with sampling and suggestive selling to get customers to buy more items. That’s what they’ve been doing that’s brought the average sale per customer up over the last year.

Hay: It’s interesting how allowing some of that information out is the perception from some of my managers is that sales are terrible, but when you start to show some of these slight increases–show the success that they’re achieving–they’re in for the long haul. And although you are comparing yourself to last week, every week it seems it can get a little better. You’re seeing the improvements with the hard work you’re doing, and they buy in.

Krueger: In a supermarket environment, you’re scanning all kinds of information at store level. On a daily basis, you can find out whether you were successful or not and how successful. You can see the results of your efforts right away.

“One of our big successes is the half pies to get that retail price point down.” — Amy Fouks

MB: Are you changing how you merchandise and market your products?

Fouks: We have launched Extreme Value items. We take a deep discount on one item in the bakery and the all the Extreme Value items from the store are on the front cover of the newspaper ad. These deeper discounts get people in the door. Even if customers are just looking for our Extreme Value item, at least it gets them in the bakery. And we can sample other items, and we can sell them something else.

Krueger: We started ELPs [everyday low prices] in grocery about three years ago. But recently, we’ve started to do it on a couple of things in the bakery. Three items we’ve done in bakery are six-count cake donuts, six-count glazed donuts, and for the summer we’re going to run hot dog buns at an ELP. We run the items in the ad, and there’s a block right above the item that says ELP. We also did some aggressive promotions at the beginning of the year. We did a 10-cent cookie sale, and we sold about 300,000 cookies among 13 stores. We had limits in the stores; it killed our gross for quite a while, but customers came in four or five days of the week and bought the limit. So if you’re willing to take the hit on something like that, you can do that once in a while, but you can’t do it all the time.

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