Rising to the top

Retailers will need imagination with their assortment and merchandising if they hope to boost the average customer visit to the in-store bakery.

Ah, the in-store bakery. The aromas are enticing, the products, oh so decadent and the self-control it often takes for shoppers to walk past all of that—tons. However, today’s consumers are striking a balance between going without and buying “just a little something” to satisfy their sweet tooth.

It iscupcake-stand-21 no surprise then that observers say one of the biggest trends in bakery is in reduced-size portions. “Today’s smaller households and shopper behavior dictate that smaller is more appealing,” says Tara O’Donovan, marketing manager for Bake’n Joy Foods, based in North Andover, Mass.

Exotic flavors and unusual flavor combinations are a growing trend as well. This allows in-store bakers the ability to tailor flavors to their specific market area, say observers. “The reality is, today’s bakers need to be creative to keep shoppers interested in the in-store bakery. They have the ability to utilize mixes and bases to create their own creations with exotic add-ins, such as a mango muffins, key lime cupcakes or chocolate chili muffins,” says O’Donovan.

Beyond using creativity to drive assortment, decisions on what to offer should be rooted in a firm understanding of consumers’ purchasing behavior, says Chip Potter, vice president of marketing, U.S. bakery products for Dawn Food Products. In January, the Jackson, Mich.-based company launched www.dawnfoodsinights.com, where retailers can find consumer trends, on-going research and solutions to help them make their bakeries a destination for shoppers.

For instance, Potter says Dawn Foods has identified three unique mindsets of individuals shopping the in-store bakery. The first he describes as the “Emotional Indulger,” a group that represents 46% of in-store bakery purchases and is motivated by pure indulgence and craving. The second segment is the “Rational Shopper,” making up around 44% of the in-store customer base. Half are men and they are driven by convenience, variety and value. The third segment is the “Trendsetter,” a group comprising about 10% of in-store shoppers that are drawn to premium quality, unique products and trendy flavors. “Trendsetters are foodies and, as a group, they have the most influence on the in-store bakery and on some of the products and ideas we are seeing now,” he says.

In terms of flavors, Potter says that coffee is one of the fastest growing trends in bakery. “Mocha, cappuccino and coffee-flavored alcohol are increasingly being added to cakes and desserts. Fruit variations are also among the fastest growing cake flavors with blueberry, compote and apple topping the list,” he says. Sweet and savory flavors, including herbs and spices, salted caramel and bacon in desserts or as toppings on cupcakes and donuts are also growing trends. “In terms of design, sweet baked goods are taking their cues directly from fashion where those trends can be translated into form, color, texture and other attributes,” he adds.

While it is true consumers continue to look for healthy items in the bakery, Potter says that can be better defined as the presence of positives versus the absence of negatives. “For instance, consumers are seeking out features such as alternative sweeteners, fruit, real ingredients, ancient grains and proteins,” says Potter. Vegan is another trend he is seeing under the healthy banner for bakery products. Historically, many of these trends follow the  foodservice lead, beginning in upscale dining and specialty bakeries then moving into casual dining, then quick-serve restaurants and finally to in-store bakeries.

The in-store bakery is not all sugar plums and roses; there are a fair amount of challenges facing retailers as well. Topping the list is trying to increase the number of in-store bakery purchases. According to research from the International Dairy-Deli-Bakery Association, slightly more than a third of surveyed shoppers (36%) report that they regularly visit the in-store bakery in the supermarket. Other research indicates that most shoppers purchased from the in-store bakery at least once last year.

Ray Lippert, vice president of sales for Bakery Crafts, based in West Chester, Ohio, says the question retailers should be asking themselves is, how do they get customers to repeat shop three or more times per year? Lippert says the solution lies in assortment offerings. “To begin with, in-store bakeries can set themselves apart by offering a traditional assortment along with unique new items that meet the aspirations of their customers.”

Perfect examples are cupcakes and other bite-sized treats, which continue to drive in-store bakery growth and are now sold for nearly every occasion from birthdays to weddings. “Cupcakes are among the fastest growing segments in the bakery industry,” says Lippert. “The reality is in-store bakeries need a solid cupcake program to be competitive.” He says a new twist more retailers are considering, involves mixing traditional dessert formats with cupcakes. “Look for one-eighth sheet cakes, small round cakes, and cookie cakes adorned with cupcakes to be the next hit. These new formats work well for any celebration and let each store offer more variety,” he says.

Cupcakes are not the only way to draw shoppers to the bakery. While cupcakes may be hot now, to maintain interest retailers will need to find other ways to catch the consumers’ eye.
“Traditional cupcake offerings are largely impulse driven purchases, but to hold consumer appeal retailers need to offer more than simply seasonal cupcakes or cakes,” says John Gardner, director of customer marketing for DecoPac, based in Anoka, Minn. “At the same time, the demand for creativity and variety poses challenges in execution for in-store bakeries.”

Grab your partner
Last year Bake’n Joy introduced a smaller, ready-to-bake 2.5-ounce cupcake batter that O’Donovan says has been very popular. “The beauty of this product, which comes in yellow, chocolate and red velvet, is that the baker can capitalize on specialty flavors by varying the frostings,” she says. “A smaller cupcake beautifully and simply decorated is a great fit for today’s in-store bakery customer.”

O’Donovan says they are also seeing growth in all-natural, organic and whole grain products. With this in mind, Bake’n Joy introduced 2.5-ounce PanFree muffin batters that couple whole grains with smaller portions. “For many consumers, especially those who are health-conscious, portion-size is important. Our all-natural 100% whole grain line includes 2.5- and 4.25-ounce PanFree muffins, 1.5-ounce preportioned cookies and several mixes and bases,” she says.

Dawn Foods new line of Cake Boss cakes, developed by the Cake Boss himself, includes six cakes featuring on-trend flavors such as red velvet (Va Va Velvet), carrot (Whole Lotta Carrots), Belgian chocolate ganache (Oh My Ganache!) and Dulce de Leche as well as butter cream iced cakes in colorful designs (It’s My Party and Bada Bloom).

In addition, Potter says its Mi Panadería line of Hispanic bakery products was created to answer the trend of Latin/Mexican inspired products and includes icings and glazes, mixes and bases and churros in popular Hispanic flavors and varieties. “In response to the Hispanic trend, we have recently added a Caramel/Dulce de Leche Two-Layer Cake to our line of seven inch dessert cakes,” he says. Another of the more interesting forms of customization today is coming from advancements in edible ink printing, say observers. “Bakery Crafts’ Copy Confection gives an in-store bakery endless ways for decorators to personalize cakes,” says Lippert. Bakery Crafts also offers a line of products that can be personalized to each occasion through icing color and piping tailored to the consumer’s specific information. “Customization has been driving growth of in-store, but unfortunately most in-store bakeries wait for the customer to come to them and rarely promote this service,” he says.

In-store bakeries also continue to see strong everyday birthday cake sales featuring licensed products. Observers say evergreen licenses such as Sesame Street, Star Wars and Hello Kitty remain perennial favorites for children. Summer blockbusters also provide a strong sales spike from May to December. Bakery Craft is putting its stock into two specific summer movies by featuring a full product line-up for the new Superman movie, Man of Steel, releasing in June and The Smurfs 2 movie releasing July.

While trendy segments help boost impulse sales, often it is still birthdays that remain the biggest margin driver in the bakery. “Despite the variety, the consumer still looks for the traditional birthday cake,” says DecoPac’s Gardner. “The question to ask is, ‘what can I do to make my birthday cake program stand out?’”

What’s on TV?
With the plethora of TV shows relating to cakes and cupcake competitions, grocers should be leveraging the expertise of their cake decorators, allow them to be creative, say observers. “Quite often great decorators gain a following and can make an in-store bakery a lot of money,” says Lippert. “Promoting these people in and around the store can be a boon for a retailer’s cake business, as can getting them involved in a national cake contest. Winners from these contests can increase sales in a retailer’s bakery by up to 15% if promoted. People love to buy from award winners.”

Beyond cupcakes and contests, Lippert also suggests retailers consider expanding their wedding cake business. Bakery Crafts offers programs specifically designed just for in-store bakeries. “For stores that do not have cake layers in wedding sizes, we even have a program that includes the cake,” he says. The company refreshes the designs constantly to keep the cakes on trend in both design and color. “These programs make getting into the wedding business easy,” says Lippert.

DecoPac’s new Edible Décor program allows bakeries to utilize easy to apply edible cake decorations in a number of different ways. “The options are endless, and by simply using our edible fondant dots, bows and chocolate items, retailers can fill their case with a multitude of decadent dessert options,” says Gardner. The company has also expanded the features of its PhotoCake system with PhotoCake Online, which gives in-store bakeries an affordable solution to personalizing cakes.

Dave’s Marketplace bakery goes big
With roots that date back to the late ‘60s, the nine-store Dave’s Marketplace has two core principles that guide every aspect of its business – to provide the highest quality products, partnered with terrific customer service. With those principles, it is no wonder then that the average Dave’s Marketplace customer shops in their stores 2.3 times a week.

The East Greenwich, R.I.-based retailer applies those same principles to its in-store bakery operations. Christine D’Orsi, bakery supervisor for Dave’s Marketplace, says when it comes to Dave’s bakeries, the focus is on freshness and variety. She says on average Dave’s carries a much larger section of breads and rolls than most of its competitors. Beyond a large and varied assortment, the retailer also understands effective marketing. For instance, bakers cycle bake throughout the day so whether it is breakfast, lunch or dinner, a customer can smell and feel that hot fresh loaf of bread or that sweet smelling cinnamon bun.

Experienced pastry chefs and bakers create, from scratch, many of the “Dave’s Classics” including Dave’s biscotti in nine seasonal flavors, fruited squares, almond horns, zeppoles and Dave’s own Italian cookie assortments. “Customers expect our bakers to maintain the same high quality that they themselves demand,” says D’Orsi.

Staying on top of consumer trends, particularly the trend toward smaller portions, has played a critical role in Dave’s success. “Just because customers are backing away from full-sized offerings doesn’t mean they aren’t looking for something sweet”, says D’Orsi. “Different varieties, as well as new flavors and textures draw consumers into buying multiple times a week. It is fairly common for our customers to try a two-piece carrot cake on a Saturday, for instance, and return on Tuesday to buy a jumbo brownie.” Bread has also sold well under this model, with a demonstrated increase in sales of half loaf Parisian, 9 Grain loaves and multigrain boules, she says.

The smaller-is-better approach is also resulting in tremendous growth in their single serve cupcake sales, especially themed cupcakes. D’Orsi says customers will typically buy a beautifully decorated cupcake for themselves, or for someone else – “just because.”

Health conscious consumers are inspiring officials at Dave’s to offer healthy and flavorful bread options. At the same time, customers are savvy with their taste and texture profiles and are not willing to sacrifice that for health. “Gluten-free is all the rage right now,” says D’Orsi. The retailer is working diligently with its multiple vendors to fill this niche in both the fresh and frozen category. “We also have partnered with local gluten-free bakeries to bring in fresh gluten-free breads, pastries and cakes on a regular basis,” she says.

Last year, Dave’s hired a nutritionist to analyze all of its products so employees can in turn, further educate themselves and customers. The retailer has also embarked on a storewide re-branding program, starting with the bakery. New labels and packaging were rolled out in December. Early feedback from customers has been very positive say officials.

Above all, Dave’s officials understand that developing a core relationship with customers to bring them into the bakery on a daily basis is paramount to its success. For example, the retailer will frequently cross merchandise bakery items during peak hours of the day to reinforce the need for warm Italian bread with dinner. “Similarly, showcasing a full muffin cart near our coffee bar encourages customers to smell and purchase fresh baked muffins. Creating unique cakes for peak holidays, sporting or local school events also helps define us and encourages customers to intrinsically know we are developing new fresh products just for them,” says D’Orsi.

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