inStorebuyer - March 2012 - (Page 24)

Overcoming the DAILY GRIND I Instores leverage the power of coffee to perk up profits in the bakery/deli. by John Unrein For centuries, coffee has been associated with wisdom. Dating back to 16th century Persia, people gathered in coffee houses — or qahveh khaneh — to engage in conversation and share the news of the day. These gathering places became known as “schools of the wise.” In 21st century America, the wisdom of serving coffee to the masses is building up to full strength inside supermarkets across the country. Instore operators are leveraging the long-established traditions of coffee and community to create a more pleasurable experience for shoppers and more profits for the bakery/deli. Operators such as Schnucks and Hy-Vee are positioning branded coffee bars at the front of the store adjacent to the bakery and deli departments. And in increasing numbers of situations, the coffee bar falls under direction of the chain’s bakery or deli director. One of the key advantages of having a coffee bar near the bakery/ deli is that consumers buy coffee more frequently than bakery or deli products, and shoppers are more accustomed to paying premium prices for premium coffee. Price targeting is the well-known strategy of swaying consumers to pay as much as possible for an item when they decide to buy it. A convenience shopper likely will pay more for a product like coffee to satisfy an immediate craving, while a bargain shopper will go for the lowest price available. The key, in coffee, is to keep all types of shoppers trading up — buying a large size instead of medium, ordering a double shot of espresso or adding whipped cream. This is why price targeting works so well in the coffee business; consumers have many enticements to spend more. And as Starbucks discovered years ago, coffee consumers typically do trade up. For 60¢ extra, Hy-Vee coffee customers can add a flavor shot from a variety of flavor choices at its Caribou Coffee kiosks. The other added advantage of a coffee kiosk in the bakery or deli is that industry statistics show there are eight distinct drinking occasions during each day, compared with three or four eating occasions. This gives shoppers that are already in the supermarket more reasons to head over to the bakery/deli for a cup of coffee for that extra energy burst. And more often than not, they will buy a baked good to go with their beverage. Says Bill Mihu, who is vice president of bakery at Schnucks and oversees coffee operations: “Our customers are enjoying the pairing of flavorful blends of Kaldi’s coffee with donuts, muffins, cookies and scones fresh from our bakery.” Specialty brands Specialty coffee brands are becoming a pivotal point of differentiation among some instore operations. Take Schnucks, which runs Kaldi’s Coffee Cafes in 12 of its 100 stores. A certified organic and kosher operator, Kaldi’s roasts and blends more than 40 coffees and espressos, specializes in organic and Fair Trade coffees | 24 | inStorebuyer | March 2012 |

Table of Contents for the Digital Edition of inStorebuyer - March 2012

inStorebuyer - March 2012
Editor's Note - Perking Up Profits
Table of Contents
Frontline News - Clabber Girl is DDA Vendor of Year
Frontline News - IDDBA Scholarship Deadline June 1
Frontline News - A Super Sculpture
Frontline News - Standard Market to Open in Chicago
Frontline News - Caravan Names Product Category Manager
Foodservice Retail - Pizza Done Right
Baking&Decorating - Cake Designs & License Agreements
Baking&Decorating - University Trademark Licensing
Bakery Development - Cakes Continue Sales Growth
Deli Development - Sandwiches Increase Deli Sales
Overcoming the Daily Grind
Kings Better Than Ever
Food Safety - Prepare for New Rules
Health&Nutrition - Reaching Out to Runners
Cheese Corner - Strategic Sampling
Product Trends
Product Showcase
Marketplace Network
Ad Index

inStorebuyer - March 2012