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BAKERY RETAILERS READY FOR CHALLENGES IN 1995

Making a profit will be the ultimate challenge for supermarket bakeries this year.Increased competition, skyrocketing packaging costs and a scarcity of trained labor all risk having a sorry impact on the bottom line.That is according to retailers SN contacted about the major challenges ahead for the year.How will they meet the challenge? In the short term, through more creative merchandising, and

Making a profit will be the ultimate challenge for supermarket bakeries this year.

Increased competition, skyrocketing packaging costs and a scarcity of trained labor all risk having a sorry impact on the bottom line.

That is according to retailers SN contacted about the major challenges ahead for the year.

How will they meet the challenge? In the short term, through more creative merchandising, and in the long term, through buying supplies with more care, and training employees better, retailers said.

Two retailers interviewed have launched new training programs and others are taking measures this year to get associates more involved in selling and to recognize them for good performance.

"It's up to us to out-merchandise the competition. You can't raise the retail because there's so much competition. The customer will leave you. And you can't put out an inferior quality product either," said Jeff Ruple, bakery director for 54-unit Harvest Foods, Little Rock, Ark. "We'll emphasize suggestive selling more this year. And in the name of convenience, we're offering different cuts of a product. Examples are a half loaf of bread or slices of garlic bread, overwrapped," Ruple said.

Other retailers said they'll do more cross-merchandising in a quest for added sales. Some said they'll spotlight a particular product during slow sales periods, and others are looking to develop signature items designed to keep customers coming back.

"We made dip bowls from round loaves of crusty bread and sampled them, filled with dip, in the bakery at Christmas. There was an ice table with veggie platters

and containers of dip right alongside. It was an outstanding success. We'll do more things like that this year. It's good to give customers a new idea of how to use a product," said Jim Weiser, bakery and deli director for 63-unit Brookshire Bros., Lufkin, Texas.

At D&W Food Centers, Grand Rapids, Mich., both cross-merchandising and signature items play big in 1995 plans.

"We're putting out a plan every week that ties in with other departments. We're concentrating hard [on selling] outside our department," said Ed DeYoung, director of bakery operations for the 25-unit chain.

"We're also concentrating on signature items this year, in the sweets area," he said. "Instead of jumping from holiday to holiday, we're going to go from signature item to signature item."

Harp's Food Stores, Springdale, Ark., is developing additional signature items.

"We've had such success with our signature dinner roll, which outsells our regular rolls in some stores two to one, that we're now working on a signature item in the sweets category," said Dan Kallesen, bakery director for the 28-unit retailer.

Kallesen also is set to spotlight one product with a special price each month, a departure from the past when such promotions were tied only to holidays .

"We did it with pudding cakes just after Thanksgiving and increased our total sales by double digits from a year earlier," he said. To deal with sharply increased packaging costs, bakery directors are shopping for the best price and, in some cases, contemplating changing the type of packaging. "We had one main supplier, but now I'm going to whomever has the best prices. We won't change the type, though. If you go to less expensive packaging you can end up harming the product," said Kathy Sears, bakery manager at Buckeye Village Market, Alliance, Ohio.

D&W's DeYoung said he's looking at downgrading some packaging.

"Many items we put in clam shells don't need to be in them. I think we may use more paper and polybags," he said. Also, D&W has started central buying of packaging to cut costs.

DeYoung is tackling the labor-shortage problem in a different way, too, this year.

"We're trying to create a more positive environment. We want people to think of bakery as a career," he said. In that regard, the chain is increasing pay levels, implementing a bonus program, and planning more informal events for associates, such as boating and golf outings.

Harp's has resolved to keep associates involved and better informed.

"We just came off our best Christmas yet, and we're making sure we pass word along about such successes," Kallesen said. "And we'll make more efficient use of our training bakery."

The training bakery, in a Harp's unit, was launched last year in partnership with J.W. Allen & Co., a Wheeling, Ill.-based manufacturer of mixes, fillings, icings and frozen cakes.

"For one thing, we need to plan ahead more in scheduling associates for training," Kallesen said.

One bakery director for a Southwest chain said that shortages of trained labor, which persist because of high turnover, will probably force his company to make more of its bakery departments self-service.

At least two other chains -- Harvest Foods and Riser Foods, Bedford Heights, Ohio, which operates 44 Rini-Rego supermarkets -- have just launched training programs to help tackle the labor deficit.

"You have to properly train new people instead of putting them on cleanup duty," Ruple said. "When they come to work in the bakery, their impression is that they're going to bake. If they get stuck washing dishes, they'll be out of there."

Harvest is remedying that by creating a pool of trained people at a large-volume store which has been designated a training center. "There will always be two people there trained in everything, doughnut frying, cake decorating and so on, and they'll be told that they'll replace anyone who leaves a store within a 20-mile radius. Then we'll hire replacements for them at the training store. It's like having a pitcher ready in the bullpen," Ruple said.

Riser Foods last month launched a formal, six-month training program in its bakeries. Tony Roseta, Riser's operations manager, said that after the training, they'll go into an apprenticeship program, which includes monetary incentives for skills learned. He said he expects to have 20 to 30 employees as apprentices by the end of the year.

Another challenge in 1995 will be sourcing an adequate variety of good-tasting low- or no-fat products, retailers said. "We're constantly on the lookout for such products. There aren't enough that taste great," said a bakery executive at a Southwestern chain. Others surveyed agreed that customers want low-fat but good-tasting products and a greater variety of them. All those interviewed see a good year for bagels and variety breads because of their healthy perception. They also agreed that consumers will continue to seek more information about products.

Brookshire Bros.' Weiser summed it up. "We all need to use nutrition labeling whether we're required to or not."