Bakery Has Retailers Rolling in Holiday Dough

The weather outside may not be anywhere near frightful yet, but grocers are already dreaming of year-end holiday sales in the in-store bakery.

“During the fall and winter, the bakeries become the destination within the store,” affirms Gaston Luna, director of bakery for Lubbock, Texas-based United Supermarkets, noting the sections’ “specialty items, classic sweets and holiday bakery items that are offered exclusively for that time period. Guests await the season and [the] overall experience of a sweets wonderland.”

With that the case, Luna asserts: “Our plan is to exceed guests’ expectations, surprise them through selection, taste and overall shopping experience, truly making it a holiday destination.”

How does United, which operates 42 stores throughout the Lone Star State, go about creating that sense of destination? “By making an [event] out of merchandising displays, with engaging signage, lifestyle, delicious images [that show texture] and educational pieces [on] ‘why these items are so special,’” Luna says, adding as an example, “We will be having a pecan pie event during the holidays, showcasing different varieties and tastes.”

When it comes to what other products to stock, he observes that United is “always researching trending opportunities. For the holiday season, specialty breads, rolls and baked pies are the main drivers; those items bring people together to share a meal. … Taking this to the next step, we will be offering a variety of specialty pies that will entice guests.”

The Right Stuff

Reinforcing anecdotal reports from stores, research shows that the holidays represent a sizable selling opportunity in the department.

“In-store bakery sales typically peak at the holiday season, as the demand for cakes, pies, cookies and other specialty desserts experiences triple-digit lifts versus off-peak, everyday item sales,” says Julie Dunmire, director of marketing-frozen at Jackson, Mich.-based Dawn Foods, citing Nielsen data. “While Christmas is the biggest driver of sales in the in-store bakery, optimizing product assortment in key categories at Halloween and Thanksgiving also can pay off.” Among Dawn’s holiday offerings are Mousse Tortes, Waterfall Dessert Cakes and Triple Layer Dessert Cakes, as well as seasonal brownies and other items in festive flavors.

It’s important to know what’s popular at what time, of course. “Key bakery categories tend to overindex during certain holidays throughout the year,” says Jill Poulemanos, senior channel marketing manager at Sandy Springs, Ga.-based CSM Bakery Solutions, which has launched the Crafted by Cinnabon pound cake, muffin and cookie line in time for the fall season, and expanded its Hershey’s and Reese’s sweet bakery offerings to include muffins and brownies. “For Halloween, cupcakes, cookies and brownies tend to overperform, while dessert cakes, cookies and brownies are more of the focus for winter holidays.”

Armed with such knowledge, bakery managers need to get the holiday product mix right. “By optimizing their assortment to include the right categories, flavors and price points, retailers can work to achieve their fair share of fall and winter holiday success,” observes Dunmire. “By bringing in extra stock and offering easy, ready-to-serve, sharing-size options to drive impulse purchases, great things can happen.

“A few key rules of thumb to maximize flavor assortment are to have enough chocolate items in the mix, as chocolate is always the No. 1-selling flavor at this time of year,” she adds. “Offering or increasing options in key seasonal flavors can increase sales, too. Red velvet, peppermint, carrot, and pumpkin spice are popular flavors that truly perform during this season. And watch for flavors like salted caramel that have been steadily climbing in the recent past and can play a role in a successful holiday flavor mix.”

For his part, David Skinner marketing manager at Omaha, Neb.-based James Skinner Baking Co., whose newest holiday offerings are the Jumbo Festive Fall Ring and Pumpkin Spice Rolls, advises “catering to regional flavors and specialty holiday items. Understanding the consumer you’re selling to will enable you to create the proper ambiance you’re aiming for, as well as the appropriate lineup of specialty bakery items.” One advantage of the in-store bakery, he points out, is that it’s “a very customizable department compared to center aisle and other fresh departments.”

Given that ability to customize, items can easily take on a festive look. “We recommend using holiday-specific icing colors on items throughout the bakery,” says Poulemanos. “Colors such as orange, green, brown and black are perfect for the fall and Halloween season, and should be used to convert everyday items to seasonal ones.”

For example, she suggests, add an orange drizzle to everyday brownies, cookies and doughnuts to create a seasonal offering. “Shades of blue, red and green are perfect for the winter holidays. Simply decorate an existing dessert cake with a poinsettia or snowflake to create a seasonal offering,” she adds.

Retailers shouldn’t avoid stocking the more expensive options, either. “Many consumers are willing to pay more, especially this time of year, for premium products that are made with the finest ingredients,” notes Dunmire. “Trading someone up from a midprice pumpkin pie to a decadent dessert can improve retailer margins, as consumers are less price-sensitive this time of year. And specialty desserts, such as tiramisu and tortes, can play a role in capturing more and higher dollar rings.”

Leading the Way

Once you’ve got the correct items, why wait for customers to enter the bakery department to start selling?

“A holiday-themed display adorned with your most holiday-relevant bakery items should greet the shopper right as they walk in the door,” suggests Skinner. “An enticing-enough display that also alludes to the consumer that they should head towards the in-store bakery for more great finds is a great starting point for driving foot traffic to the department once the consumer arrives at the store.”

“To drive awareness of both new products and limited-time-offer items, point of sale is a great start,” agrees Courtney Erickson, associate marketing manager-shopper marketing for the In-Store Bakery & Deli Division at Buffalo, N.Y.-based Rich Products Corp., which offers a special portfolio of pumpkin spice-flavored items, including cake doughnuts, cookie dough, fully finished variety cakes, un-iced cupcakes, Bettercreme Whipped Icing, the Jon Donaire Praline Cheesecake and Our Specialty Sweet Middles cookies. “This includes merchandising within each department and also at the front of the store.”

“Path-disrupting merchandising places key holiday items directly in the path of the consumer to capture sales, even when an item may not be on the list,” Dunmire recommends. “Secondary display opportunities, such as specifically designed seasonal display racks or tables, can pay off in incremental sales as well.”

“These displays should be put up at least one to two weeks prior to the holidays and will help to drive impulse purchases,” says Poulemanos. “For planned purchases, holiday displays make it easier for customers to find the retailer’s holiday offering. The displays should utilize holiday-specific signage to capture a shopper’s attention and help them navigate the seasonal offerings.”

When consumers finally arrive at the department, the in-store bakery “should create an ambiance centered on the holiday that they’re promoting,” notes Skinner. “In addition to decorations that create an overall mood for the department, personnel should tap their suppliers for signage and ideas pertaining to how they think their product should be displayed. Taking advantage of manufacturers’ seasonal packaging, as well as flavors, [will] help add to the presentation. Being close with suppliers and understanding their promotional offerings and holiday items make it easier, financially and creatively, to execute a successful display.”

He adds: “Sampling is a great tool once the consumer is at the store, but oftentimes is not enough enticement for the consumer to make a special trip to the store. If the budget doesn’t allow for larger events, such as tutorials or presentation ideas, a limited-time offer of specialty items can be enough encouragement. Stressing limited availability of certain specialty items is a time-tested tactic to drive consumers in.”

Sampling — one to two items at most — is a strategy that tends to increase sales and traffic throughout the year, concurs Alicja Spaulding, director of marketing at Aurora, Colo.-based SROriginals. “But in particular during Q4 holidays, sampling is instrumental, as consumers are already looking for desserts/baked goods, and a sample can secure a purchase in grocery versus another outside location, i.e., a specialty store,” says Spaulding, whose company will introduce its Ticklebelly Cakebars during the fourth quarter in the following seasonal flavors: Sweet Pumpkin, Peppermint Crunch and, in select markets, Red Velvet.

Reaching out to consumers via technology can be part of the plan as well. For instance, Erickson’s division “offers retailers digital content that they can tailor for the promotion of their in-store bakery products and features. This can prove especially valuable during the busy holiday season. You should explore all avenues available for connecting with shoppers and raising awareness even before they start planning the next journey to your store.”

“Many of the big names in social media outfits offer advertising platforms that are user-friendly and very efficient at targeting your desired demographic,” notes Skinner. “From promoting specialty items to offering digital coupons, social media enables in-store bakeries to interact and present offers in unprecedented form. Depending on the depth of your campaign, they are oftentimes also the most cost-efficient form of promotion. During these seasons, consumers are already flirting with the idea of indulgence pertaining to bakery, and being prompted as they enter the store or seeing an ad on their social media feed will only further encourage purchase.”

Pairing Up

Strategic product pairings can also play a pivotal role in generating higher in-store bakery sales — and beyond — during the festive season.

Eric Richard, education coordinator for the Madison, Wis.-based International Deli-Dairy-Bakery Association (IDDBA), points to “soon-to-be-released research from IDDBA on in-store bakery bread [showing] that stores can boost sales of products that have a natural correlation; that is, shoppers who purchase one type of product are more likely to consider purchasing others displayed next to them, based on shopper eating and lifestyle patterns.

“For example,” explains Richard, “during Christmas and the December holidays, in-store bakeries should consider pairing special-occasion items like artisan breads, croissants and crusty hot hearth breads with sweet options like flavored sweet breads, coffeecakes, Danishes and trays of assorted product. Bakery products can also be successfully merchandised outside of the in-store bakery by utilizing the same principle. Fresh-baked bread pairs perfectly with many holiday food products, such as bean dip and bread bowls, deli butters and crostini, and salami and mini sandwich rolls. Departments can take advantage of correlation by promoting breads that complement other holiday favorites, such as the fast-growing categories of deli dips, spreads and toppings, as well as specialty meats. It can be as easy as placing breads near your in-store delis with recipe ideas.”

Skinner similarly notes that “retailers can cross-promote with other departments to encourage purchase. For instance, some small signage around the frozen turkeys that points the consumer to the in-store bakery for fresh rolls, pies and specialty offerings would work well around Thanksgiving.”

As holiday bakery merchandising evolves, United’s Luna reflects on the lessons he’s learned to date. “Although classic bakery items need to be always available to guests, differentiation needs to be a factor,” he says, advocating “a twist on the classic/ traditional, and creative, educational merchandising.” Above all, however, he emphasizes the need for “consistent high-quality items.”