Grocery margins continue to be slim, as food prices rise and consumers demand more personalized service and promotions — but there are bright spots within the segment. Despite the fact that bakery revenues typically make up 4% of a grocer’s total revenue, the margins for bakery goods tend to run higher than average. This makes the bakery an attractive department for innovation in an effort to bump up margins. The key is to identify improvements that can decrease costs without sacrificing quality or service.
Three areas have emerged that meet these qualifications, including consumer digital ordering systems, operational reporting and analytics, and social media and promotions. At first glance, these may seem like tools that fall outside of a typical bakery’s area of expertise. But, to remain competitive, attract new customers and grow, grocers are looking to these tools as a source of innovation and efficiency.
Consumer digital ordering systems
It seems simple, right? Make purchasing your products as easy as possible. But this has not always been the case with in-store bakeries. Today, cake books have come alive in the form of pre-designed and branded digital ordering systems. Web-based and accessible from any connected device, digital ordering systems allow consumers to order cakes anytime, anywhere, and they promote the purchase of higher margin customized cakes and add-ons, like photo cakes. The ease of ordering, ability for consumers to upload digital images, and access to popular decoration ideas improves the experience and also has the potential to increase margins.
Grocers like Mackenthun's Fine Foods use a system so consumers can order from home or at the store after bakery hours, so it reduces missed sales. It has also improved turnaround time. Orders go straight to the Mackenthun's Cakes.com portal, where staff can easily review and schedule cakes, or reach out to customers to clarify details. These efficiencies mean that orders are accepted and created faster, allowing the bakery to move more product. In fact, since installing this system, Mackenthun's response time has been cut down to about half a day and “order-to-delivery” time has also decreased.
Analytics and reporting
Without the luxury of a crystal ball to see into the future, bakeries have used manual processes to track inventory and sales, plan and forecast. However, today’s growth strategies require a much more data-fueled process. A digital ordering and reporting system does double duty by tracking order details and providing visibility into long-term sales volumes, product trends and timing. Through analytical reports, bakeries can determine which products are popular (and at what times of the year) and which ones could be eliminated. This helps streamline inventory, marketing, promotions and even staffing. When bakeries are merchandising and creating products that are proven winners, costs go down and efficiencies go up, along with sales.
Social media and promotions
As much as we like to think that cakes and artisan breads sell themselves, bakeries still need to market their services. By tapping into insights from the reporting system, bakeries can create timely promotional plans and share customized offers with consumers to drive new or repeat sales. Social media has become a key tool for marketing programs, but bakeries don’t always have the time to stay on top of social posts. To make it easier, bakeries can look to their reporting software provider for content that is easily re-shared. This also helps bakeries promote new decoration themes, such as licensed characters that become popular because of movie releases or sporting events.
Taking the time to implement an online ordering and reporting system can create many opportunities for innovation. With built-in tools to decrease costs without sacrificing quality or service, bakeries can drive toward growth and help add to the grocer’s bottom line.
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