Three days after Christmas Day 2013, the 90-year run of Dominick’s supermarkets ended in Chicago. What went wrong for this iconic chain, according to retail industry experts, is a tale of what not to do in today’s grocery business – lose touch with local customers. Dominick’s fate also has a lot to say about how to approach the busiest time of year for the bakery/deli business – the Thanksgiving through Christmas holiday season. This is the time that can make or break your year. So plan carefully.
Roughly 15 percent of all instore bakery sales occur from Thanksgiving week through Christmas in the US. Christmas ranks as the No. 1 sales week for the instore bakery, followed by Thanksgiving, Valentine’s Day and Mother’s Day, according to industry sources.
In the bakery, categories such as bread and rolls, cookies and sweet goods (cinnamon rolls, coffee cakes, etc.) all post their biggest weeks of the year leading up to and through Christmas. This holiday is the third most important of the year for cakes. And it’s No. 2 for pies.
In the deli, the Christmas week ranks No. 1 for deli prepared foods and rotisserie chicken.
The following are weekly sales per store (based on recent years at US instores) of key bakery and deli categories during the Christmas week, according to Nielsen Perishables Group.
Bread and rolls: $4,565
Sweet: goods $927
Deli prepared foods: $14,236
Deli meats: $5,461
Rotisserie: chicken $1,677
Deli sandwiches: $1,433
Deli pizza: $820
Deli sides: $423
In one emerging trend, Bill Klump, senior vice president of marketing for Butterball, says that men represent an untapped opportunity as a target shopper demographic, especially as more men become the primary grocery shopper of the household. Back in 1979, 94 percent of women did most of the grocery shopping, but times are changing. A recent study found that men are much more involved today in household shopping, and 86 percent “like to experiment” when they do the cooking.
“There is no doubt that men’s roles are changing,” Klump says. “Dads should become more of a target of our merchandising efforts.”
Several instore bakery and deli executives called last December a slightly subpar year, due to extreme weather conditions and other factors. For the fourth quarter 2013, large grocers such as Supervalu and Safeway posted identical store sales growth of 1-2 percent, while wholesale clubs like Costco reported 6 percent net sales growth. Consumers continue to seek out value at club stores, particularly around the holidays.
At Safeway, sales and other revenue was $11.3 billion in the fourth quarter of 2013 compared to $11.2 billion in the fourth quarter of 2012. An identical-store sales increase (excluding fuel) of 1.6% was largely offset by a decline in fuel sales. Safeway closed Dominick’s, which had 72 stores, on Dec. 28.
According to a report in the Chicago Business Journal, Dominick's in recent years was being squeezed on both ends as it tried to maintain market share in the city and suburbs. “Perhaps the key reason why Dominick's ultimately was doomed is something much trickier to quantify — a failure of zestful imagination across the boards. To put it bluntly, Dominick's had become an immensely boring grocery shopping experience. Nothing in the way management designed or merchandised the stores made them distinctive enough to engage shoppers and build loyalty. Any sort of wow factor was totally absent,” wrote reporter Lewis Lazare of the Chicago Business Journal.
With so much at stake during the holidays, retail expert Harold Lloyd offers several suggestions for creating a “wow factor” around Christmas.
- Platters on Parade – Take color photographs of your most popular party platters and position stand-up posters on top of the deli case.
- Would You Like a Carry Basket with That? – Hand each deli customer a carry basket with their single purchase to encourage them to buy more. Lloyd says that research reveals a supermarket shopper will spend $10 at the store on average with no basket, $20 with a basket, and $40 with a cart.
- Easy Pricing Enhances Impulse Sales – Get rid of extraneous information on signage and keep it simple, like two for $10. Studies show “easy pricing” boosts sales.
- Catering Box with Bling – Metropolitan Market in Seattle and Tacoma, WA, attaches a perforated tear-off business card from their catering manager with every lunch box sold to encourage customers to plan their next party with Metropolitan Market.
- Promote Cheese in Produce – Encourage your perimeter departments to work together to maximize fresh food sales at your store, like Hy-Vee does by promoting specialty cheese snacks in the produce department during the holidays.
New specialty cheese options help make the fifth idea possible with ease. BelGioioso features new snacking products for specialty cheeses, including Asiago Snacking Cubes, Fresh Mozzarella Snacking Cheese, and Shredded Zesty Blend (with Peperoncino and Provolone).
And bakery innovations are aplenty.
Carrying dessert cakes that represent restaurant quality like Dawn’s Vortex Cakes entice and encourage customers to purchase for smaller celebrations. Use signage to emphasize the indulgence and quality of your cakes around the perimeter of your bakery. Stocking small individual size items such as Dawn’s Mini Bundts provide another opportunity for little celebrations. Feature secondary displays of smaller cakes for two-person households that are looking for quick options for dessert or snacking.
Fondant DecoShapes and Fondant DecoSheets from DecoPac help instore cake department decorate Christmas cakes with sophisticated style and simplicity.
Phil Crow, president of Creative Occasions, says that instore bakeries can leverage the popularity of cakes without adding labor by promoting pre-decorated seasonal cakes. Creative Occasions has a new “Four Seasons Cake Program” that includes options for fall (New England Caramel Apple Spice Cake) and winter (Raspberry Cream Cheese Cake). Creative Occasions also offers new “Poured Cakes,” which are fully finished poured cakes made with high-ratio cake, split and filled with mousse and iced with buttercream. Another addition to Creative Occasions’ line is “Simply Banded Cakes,” which allow instore cake decorators to put the finishing touches on a banded cake that is available in three base flavors.
Bakery Crafts features a wide selection of Christmas decorating tools and ideas for cakes and cupcakes, including Santa Treat Wraps and snowflake and ornament decorations.
These are just a few ideas that instore bakeries can use to add a wow factor to Christmas season displays.
“As I travel to supermarkets across the country, I see more opportunities to sell,” Lloyd says.