FRESH-BAKED BAGELS ROLLING UP VOLUME RISE AT CARR GOTTSTEIN

ROSEANNE HARPER

ANCHORAGE, Alaska -- In the land of glaciers, Carr Gottstein Foods here is making sure customers know that at least its bagels aren't frozen.

The chain pushed off a fresh-baked bagel program in August that now is snowballing in sales, with increases of 60% in the two stores where fresh-baked bagels have replaced bake-off versions of the product.

The two units together are selling approximately 2,500 bagels a day, said Steve Neilson, director of bakery for the 23-unit retailer.

Carr Gottstein chose bagels as one way to sharpen a "freshness" edge it had already been honing. The chain began earlier this year to implement a strategy that puts emphasis on its fresh food departments.

The idea, officials said, is to set the chain apart from the competition. Mass merchandisers, including Kmart, Sam's Club, Wal-Mart and Sports Authority, have jumped into the market area in and around Anchorage just in the last year.

Why bagels? It's hard to find a bagel that's mixed, formed and baked in Alaska, and the chain is taking advantage of that niche, Neilson said.

The stores have taken measures to underscore that attribute.

"We make frequent announcements in-store, and the bagels have their own display, not just in floor bins, but a tall self-service display with a red canopy over it. You can't miss it," Neilson said.

A sign on the canopy says, "Alaska's best bagels. Baked fresh every morning exclusively at Carr's." Danglers elsewhere in the store carry the same message.

Neilson told SN that additional support such as window banners, bag stuffers and cross-merchandising in the stores' cafes are on the agenda, as are expansions into bagel sandwiches and a companion, flavored cream cheese program.

"My aim is to double our bagel sales with this program," he said. Fresh-baked bagels will eventually be delivered daily to at least 11 stores.

"We'll definitely put it in other stores where it makes sense, but the logistics of getting the product, while it's still fresh, to stores further away can present a problem," Neilson added.

The only competition for fresh bagel sales comes from a family-owned operation with two retail shops here. Carr Gottstein had considered contracting with that company to supply the chain with bagels, and Neilson said such a link-up was tried but didn't work because the company had trouble meeting the retailer's demand.

Instead, Carr Gottstein decided to go it alone. The chain invested $65,000 to add 300 to 400 additional square feet of space in a remodeled store and purchase two bagel formers, a former's bench, mixers, pans and racks. That site will serve other Carr Gottstein units. Three staffers are dedicated to bagel production, Neilson noted.

The bagels are priced the same as the bake-off variety in other stores, even though the store-made bagels are bigger; they are 4 ounces, compared with the bake-offs, which weigh in at 3.

The retail is 40 cents each, $2.39 for six and $4.49 for a dozen. Neilson said the cost for Carr Gottstein is estimated to be within pennies of the bake-off variety. Shipping and inventory costs are less, but it's too early to determine the precise cost of labor, he said.

Carr's bagels are not boiled, and thus are not true "New York" bagels. "They're not as chewy as a New York bagel, but they may have more universal appeal," he explained.

Mixed from a base, with flour, water and yeast added, the bagels are formed, retarded overnight, and then baked with a steam-injection process.

"Bagel bases offer an easy way to execute a bagel with the perception of fresh," Neilson said. The chain has so far doubled varieties from seven in the bake-off program to 14 in the store-made program.

Cinnamon-raisin is the top seller in both lines, Neilson said. Blueberry is a close second, and plain comes in third.

Neilson pointed out that the company chose bagels to carry its freshness image because the bagel business has been growing over the last four or five years. "They're still booming in Seattle and we're like a mini Seattle. Seattle is a three-hour plane ride away from this town of 275,000."