AKRON, Ohio -- Private label could have a sweet future in the in-store bakery, retailers and industry experts told SN.
Shaws, Dorothy Lane Markets and West Point Market are among those that believe strongly in attaching their company's name to freshly baked, unique items coming out of their in-store bakeries.
"Every time someone leaves your store with cookies or brownies in a box or package that has your name on it, it's great. Wherever they open that wow box, they're endorsing your whole company," said Russell Vernon, president of West Point Market, a single-unit upscale retail store, here.
Vernon said he would jump at the chance to link up with a manufacturer who could supply West Point with selected bakery products made and packaged to West Point's specifications. The problem is that West Point Market just simply isn't big enough to make that worthwhile, Vernon said. The cost would be too high for a single-unit operator, he explained, but he emphasized that the industry abounds with such opportunities for multi-unit retailers.
"Private label is a great competitive tool and it's getting more important everyday as competition in the marketplace intensifies. We all need something we can call our own, something that's top quality with top quality packaging," Vernon said.
Dorothy Lane Markets, Dayton, Ohio, also sees tremendous value in putting a distinctive name to its own products.
"We're just coming into the season where we make a big thing of our Vera Jane shortcakes. Our president's name is Vera Jane. That's how they got their name," said Scott Fox, bakery director for the two-unit upscale retailer. "We make the shortcakes here. We pack four to a bag and then set them into strawberry boxes. We start off the strawberry season that way and keep that going till September," Fox said.
Dorothy Lane Markets also has its own "Dorothy Lane Market Bread Company" artisan breads for which it has created distinctive bags. The bags also list the Dorothy Lane's whole repertoire of bread artisan bread varieties. The Dorothy Lane label has served the retailer well in staking out a place in the market.
"We're not just an in-store bakery anymore. We're competing against specialty bakeries, the boutiques," Fox said. And like Vernon at West Point, Fox views the packaging as mini moving billboards that catch consumers' attention and hopefully pull new customers into the store.
Shaw's Supermarkets, East Bridgewater, Mass., has specialty products, such as tiramasu slices and Napoleons made by an outside source to its specifications and markets them under the Shaw's label. It also puts its name to a majority of items it bakes in the in-store bakery. The chain recently has put a strong focus a line of bake-off crusty breads manufactured to its specs. Since the beginning of the year, the breads have been rolled out to all the chain's stores and are merchandised in newly designed bags that say, "Shaw's Breads of Distinction."
"Ours are not run-of-the-mill private-label products. We design the items with our category manager, food technologists and our suppliers," said Bernie Rogan, director of corporate communications, for 168-unit Shaw's.
"We've won customer loyalty with our private-label bakery products. So much so that if they see a new product with a Shaw's label on it, they're apt to try it," said Rogan.
Other chains, in some cases, have linked up with manufacturers to create custom products for them but they don't put the store's name on the product. The assumption is that the customer will perceive that the product is made in-store and many are merchandised from a service counter.
While the in-store bakery may seem to be a particularly appropriate candidate for private label because baked items can be given a unique twist and are often packaged, there's relatively little private-label activity in that department, according to industry sources SN interviewed.
One of the reasons could be that the in-store bakery is still in its youth compared to the other perishables departments in the supermarket, one consultant said.
"It's hard to find private label in in-store bakeries. After 20 years, the in-store bakery still doesn't seem to know who it is. Bakeries are all looking alike because they all have everybody's program," said Carl Richardson, a Rochester, Mich., consultant who is chairman of the Retailer's Bakery Association's National Paczki Promotional Board.
Richardson added that opportunities exist for partnering with manufacturers to create custom products. Some of the larger chains have done that, but aren't necessarily packaging the product with their name on it, he said. And yet, adding the chain's name could help market the product, the department and the store, other sources said.
"It takes your name outside the store," said Vernon at West Point Market, pointing out that the product's package can act as a miniature, moving billboard.
"When that wow package is opened in front of 10 or 20 people at a gathering they're going to know where that great product came from," Vernon said.
But, from an economic standpoint and also to underscore the products' attention-getting qualities, private-labeled items should be kept to a minimum, he said.
"For example, if we were big enough to do that, we'd have only our best-selling flavor of brownie or cookie packaged in a private label box. That would be enough. Sales of the other varieties would be pulled along with that," Vernon said.
But concentrating on one just one item allows you to control packaging costs and also to focus your marketing better, he said.
A New York City retailer, Morton Williams Associated, sees bakery as one of its top areas for private label.
"It's one of the departments you can definitely set yourself apart with," said Avi Kaner, vice president on the 12-unit, Bronx, N.Y.-based urban independent. The company uses a round, gold-bordered sticker on a white cake box.
"Every operation is different. If you're large enough, you could source a product, made to your specs, from outside, and then market aggressively. Your sales staff is so important in that respect," said Fox at Dorothy Lane, pointing out that you need to emphasize that your private label products are made from your own recipes and that they're top quality.
But here lies the dichotomy: if the chain is very large, it's large enough to pay for private-label manufacturing and packaging by an outside source, yes, but chances are it's in direct competition with other big chains, maybe even Wal-Mart, and therefore has to be price sensitive, said one source. And that does away with the attractive high-margins that small operators like West Point and Dorothy Lane can put on their unique products. Another reason private label is slow in taking hold in the in-store bakery lies in consumer perceptions, industry sources told SN.
"Since bakery is still the only department where the supermarket shopper perceives that product is produced in store, most items remain unbranded so as not to detract from that 'homemade' perception. The bakery chooses to call its exclusive product presentations signature products," said Ed Weller, president, The Weller Company, a North Hollywood, Calif., consulting and marketing firm.
"One exception is the huge and growing artisan bread category which commands a hefty price and generates a hefty profit. Those products also are being produced with a shelf life that extends beyond the former one-day formulation. The usual brown paper bag packaging is often printed with a private label name and attractive graphics. The private-label concept, in this case, is designed to identify the product as special and upscale, exclusive to the chain," Weller added.
At least one well-known branded artisan bread manufacturer told SN he has been surprised recently by the amount of private label business he is doing with supermarkets. He noted that private label has grown to represent 20% of his business just in the last two years.
While his private label customers right now are in his area making daily delivery possible, the manufacturer has been spurred to create a bake-off line.
"Bakery non-commercial products in a bake-off situation are assigned store-brand status by the consumer, but many stores could do a more professional job of branding them," said Brian Salus, president, of Salus & Associates, a Richmond, Va., consulting firm.
"I believe that the dairy, bakery and the produce departments offer the most obvious 'assumption of store brand' to the consumer," he said, but he warned against carrying a label from a commodity item through to bakery or to any of the high-end perishables departments.
Salus also, along with other industry sources, emphasized that when you put your name on a product your company's entire reputation is on the line. That's a particular challenge in the perishables departments where shelf life is short.
"Remember that the freshness clock is ticking, and managing freshness is a key any perishable department's success," Salus said.