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BAKERY: BRAND POWER

Recognizing the drawing power of well-known, high-quality brands, many supermarket chains partnered with regional and national manufacturers to raise the profile of their in-store bakeries.The trend represented part of a larger strategy by operators to generate new excitement and revenue for the mature department, while addressing ongoing concerns over specialized labor and inventory management.Labor-intensive

Recognizing the drawing power of well-known, high-quality brands, many supermarket chains partnered with regional and national manufacturers to raise the profile of their in-store bakeries.

The trend represented part of a larger strategy by operators to generate new excitement and revenue for the mature department, while addressing ongoing concerns over specialized labor and inventory management.

Labor-intensive doughnut making emerged as one of the focal points in 2001. For the doughnut makers, having an operation within a supermarket opens another profit station in a nontraditional setting. For retailers, having the big-name companies in their stores creates buzz and may lighten the burdens of labor and supply.

In some cases, the big names replaced the store's own product. Dierbergs Markets, Chesterfield, Mo., recently added Krispy Kreme doughnuts to its bakeries, and discontinued its own line. The launch of Krispy Kreme doughnuts coincided with the opening of Dierbergs newest store; company officials plan to roll out Krispy Kreme doughnuts at all 19 stores after the first of the year.

Winston-Salem, N.C.-based Krispy Kreme is becoming familiar to customers at other supermarkets. The company has similar arrangements with Rice Epicurean Markets, Houston, and Acme Markets, Malvern, Pa., among others.

Even retailers renowned for their scratch bakeries, such as Lakeland, Fla.-based Publix Super Markets, have entered into co-branding agreements with Krispy Kreme. Early in the year, Publix announced a test program, featuring the Krispy Kreme brand in nine stores in the Tallahassee, Fla., market.

Another celebrity in the baked goods world, Dunkin' Donuts, opened for business in a Stop & Shop unit in Mansfield, Mass., early in the year. The store-within-a-store, situated next to the store bakery, featured Dunkin' Donuts' full line of products, including hot and cold coffee beverages, doughnuts, muffins, croissants, bagels and hot sandwiches.

The company planned to open similar formats within three units of Stop & Shop, possibly replacing some in-store bakery products with the doughnut maker's merchandise. Employees of Stop & Shop staff the outlets, and that distinguishes the format from earlier efforts. Those consisted of self-service towers set up in several convenience-store chains.

Officials at Dunkin' Donuts told SN the venture is part of a strategy to gain access to alternative venues, such as airports and sports arenas.

Elsewhere, retail chains used the opening of new stores to showcase innovative display cases and new merchandise in the bakery. That was the case earlier this year when Lund Food Holdings opened its 20th store in suburban Minneapolis.

One of the first things customers notice when they walk inside the new Lund's in Plymouth, Minn., is a marble-topped European-style pastry case, which was custom-designed for the retailer.