By selling no donuts or custom-decorated cakes, Fresh Markets’ in-store bakeries go against the grain–a deliberate move for this 47-unit specialty grocery chain based in Greensboro, N.C.

Fresh Markets are set up unlike most other supermarkets in that each store’s fresh departments (prepared foods, produce, meat and bakery) account for about 75 percent of its retail space. The remaining space includes a limited amount of groceries, dry goods and a wine department.

Fresh Market positions new stores in upper income areas, such as this one in Kildeer, Ill.

At an average of about 20,000 sq. ft., Fresh Market stores are smaller than traditional supermarkets as well. The company’s approach with smaller, easy-to-shop stores and fresh-focused product lines is a working strategy for the family-owned independent specialty grocer.

“It’s like going to the neighborhood butcher shop, grocery stand and bakery shop,” Ken Towery, vice president, operations, said in a published report. “We’re trying to create an environment that takes you back to a simpler way of shopping.”

The privately-held company does not divulge financial results and declined to participate in this article. Founded in 1982 by the Berry family, The Fresh Market has grown to nearly 50 stores and plans to open at least 10 new stores annually, according to company reports. The company opened four new stores in August this year in Ft. Wayne, Ind.; Mandeville, La.; Kildeer, Ill.; and Savannah, Ga.

Industry observers estimate that each store generates about $200,000 a week in sales, about half that of an average supermarket. Annual sales have reached more than $300 million, compared to less than $200 million four years ago.

Specializing in niche bakery
Modern Baking visited two of Fresh Market’s newer stores, in Kildeer and Geneva, Ill. Both are upper-income suburbs west of Chicago, appropriate locations for a specialty foods grocer. The two stores also are located in new-construction strip malls, an indication that the ever-expanding Chicago area is increasingly open to new players in the supermarket arena.

Until recently, Chicago has been dominated by supermarket chains Dominick’s, owned by Safeway, and Jewel, an Albertson’s chain. But, Fresh Market is among a number of supermarket chains, including Marsh Supermarkets, Indianapolis; Trader Joe’s, Monrovia, Calif.; Meijer, Grand Rapids, Mich.; and Whole Foods, Austin, Texas; chipping into the Chicago market.

Despite competition from large supermarket and super store chains in most of its target areas, Fresh Market differentiates itself with its bakery and other fresh departments.

“Fresh Markets offer a unique, fresh-oriented shopping experience that is different from traditional supermarkets and discount retailers,” says John Hauptman, vice president, Willard Bishop Consulting. “The efficiency-oriented retail scene is saturated (in some areas). There is more room for fresh oriented retailers,” he adds.

Each store has an in-store bakery, which bakes products on-premise primarily from frozen dough. The bakeries also offer a significant amount of thaw-and-sell product, particularly in its gourmet cake line. Fresh Market’s product line includes breads and rolls, pies, cakes, pastries, cookies, nut breads and sugar-free baked products.

While labor costs are low on the production side of Fresh Market bakeries, the company makes up for it on the service side. Bakery salespeople are charged with specialized packaging, merchandising and serving customers. At least five people manned the full-service bakery department during Modern Baking’s visits in the morning and afternoon hours.

“Their bakeries use top-of-the line frozen products,” said an ingredient supplier. “They don’t skimp, and their prices are very reasonable.”

Peanut butter chocolate chunk cookies are among Fresh Market's full line of premium cookies.

Aside from not offering decorated cakes or donuts, Fresh Market’s in-store bakery product line is similar to that of other in-store bakery operations. However, Fresh Market brings out its signature products by offering a broad selection of flavors in specific categories. Specialty bread, loaf cakes, cookies and dessert cakes are among Fresh Market’s signature categories.

During Modern Baking’s visit, the in-stores offered three varieties of focaccia breads, including kalamata olive and pepper, garlic and herb, and sundried tomato and asiago cheese. Fresh Market offers a broad selection of sweet loaf breads, including gingerbread, apple nut, triple berry, banana nut, cranberry orange and carrot nut. The breads are merchandised and packaged with gold labels and twist ties, enhancing Fresh Market’s specialty food image. (See accompanying article on p. 39.)

Bakery granted prime space
Fresh Market dedicates much space to bakery merchandising. During Modern Baking’s visit, bakery filled nine self-service tables with in-store product. The bakeries are positioned in the back right position of each store next to an extensive meat department and across the aisle from the center-store service prepared foods department.

Bakery products are displayed in front of the bakery and in the center of the aisle between meat and prepared foods, creating a coordinated sales effort among the three departments. Products also are cross-merchandised in other parts of the store as well. For example, Fresh Markets’ cake rolls were merchandised next to a display of strawberries, raspberries and blueberries in the produce department.

The stores offer a limited selection of groceries and dry goods. The grocery aisles are angled to direct customers to the fresh departments in the center and perimeter of the store.

Fresh Market’s in-stores also offer an extensive artisan bread line, produced primarily from frozen and par-baked doughs. Raisin challah, roasted garlic Italian bread and rustic rosemary bread are among the broad selection. The bakeries merchandise specialty breads along side apple and pumpkin butters during the fall, further encouraging add-on sales.

“They were one of the first to hit a market niche that wasn’t being serviced,” the bakery ingredient supplier says. “They usually would take over an old grocery store in a neighborhood and offer more fresh, natural foods, like Whole Foods Market and Wild Oats.”

Fresh Market’s strategy to become the neighborhood grocer through smaller-sized stores and specialized product lines has been the company’s long-running goal. Large supermarket chains, such as Safeway’s Lifestyle stores and Supervalu’s new Sunflower Markets, are moving towards smaller formats with more fresh, natural foods. Even Wal-Mart’s Neighborhood Markets are attempting a convenient neighborhood approach.

“Consumers are splitting their shopping across more formats than ever before,” Hauptman says. As consumers shop for price deals at super centers, mass merchandisers and dollar stores, they are increasingly turning to other store formats for better quality bakery products and fresh foods.

Fresh Market is positioning its in-store bakery program to draw those fresh-focused customers through signature products and a service-oriented shopping experience.


A sampling of Fresh Market’sretail prices
Chicago area:
Sourdough boule, 1 lb. $2.19
Baguette $2.19
Raisin challah round,1 lb. 1 oz. $3.49
Hamburger buns,
8 pack, 1 lb. 15 ozs. $2.33
Multigrain rolls, 6 ct. $1.99
Lemon almond poppyseed bundt cake $5.99
French silk pie, 9 ins. $9.99
Raspberry white chocolate bar cake $7.99
Danish $0.99
Cinnamon roll $1.29
Peanut butter chocolate chip cookie $0.65
Gingerbread loaf, 1 lb. $3.99
Pumpkin swirl cake roll $5.99
Cheesecake, 6 ins. $7.99


Fresh Market’s...at a glance
Headquarters: Greensboro, N.C.
Market served: primarily Southeast with stores in Florida, Georgia, Kentucky, North Carolina, South Carolina, Tennessee and Virginia; recently ventured into Midwest with stores in Chicago and Indianapolis areas
Competitors: Food Lion, Harris Teeter, Ingles Markets, Dominick’s, Jewel
Number of stores/in-stores: 47/47
Avg. store size: 20,000 sq. ft.
Annual sales: $300 million
Management: Ray Berry, president; Craig Carlock, vice president, operations; Mike Westbrook, bakery marketing coordinator
Year founded: 1982
Bakery product line: breads and rolls, pies, cakes, pastries, cookies, nut breads and sugar-free baked products
Web site: thefreshmarket.net
Plans: open ten new stores with in-store bakeries annually

Packaging makes an impact
Fresh Market’s products may or may not be better quality than those found in traditional supermarket in-stores, but their packaging says they are. Greensboro, N.C.-based Fresh Market packages it bakery products to fit the chain’s specialty food store image. Focusing on details, such as packaging bundt cakes in clear plastic containers with black bases and decorative liners, helps set Fresh Market apart from its competition.

Basic buns become specialty items through packaging details.

Fresh Market’s bakery products are not unusual, but walking through the bakery gives customers the feeling they are in a gift shop. The packaging encourages customers to buy for themselves and bring a Fresh Market product to a friend or group event.

For example, simple banana breads and other sweet loaf breads are wrapped in clear cellophane bags with gold labels and gold twist ties. Butter buns are packaged in decorative maroon and gold trays. Cookies are arranged neatly face-up in clamshell containers, exposing the chocolate chunks and nuts on the tops of cookies.

The products take precedence in Fresh Market’s bakery packaging. But, added touches, such as labels, ties and liners, offer customers an extra incentive to buy.