There has been a lot of discussion in the media over the past few months regarding the $1 ‘bread war’. A major push by major supermarket chains for cheaper goods and the effect it is having on small independent bakeries has entered the national conversation.
It would be unfair to assume that every baker’s situation is the same, but let’s look at some reasons and options available to bakers to counteract the threat of supermarket price gouging.
Small independent bakeries have been around for a long time and generally produce a wide range of products, including the humble sandwich loaf. The problem with this now though, is that it puts us into direct competition with the major plant bakeries and supermarkets, who are well equipped to manufacture and sell big volumes at low cost.
They then market it with all the bells and whistles to entice the buying public into purchasing their product.
Maybe it’s reached the point where small independent operators need to begin to look at other options and change, if possible, their business structure and plan to avoid this confrontation. They should work smarter to do the things that the large operators can’t and develop new markets to entice the paying public into their stores.
While the ability to produce large volumes is a positive, it also comes with its downfalls, such as a lack of flexibility and design opportunities. The small business model on the other hand is designed to allow for flexibility and change. It’s just that many of us don’t do it because it takes time and is hard.
While it may be hard, is it any harder than working all night and producing sandwich loaves to give away with little to no margin and finding that sales still fall because you can’t compete against the larger marketing budgets?
There has been big changes in Europe due to similar reasons with the French baguette becoming mass produced and sold cheap, cutting into the margins of the small independents. If we can learn from their successes it may save us a lot of time, stress and heartbreak.
The big mover in many parts of Europe at the moment is sandwiches; the small independent bakers have incorporated sandwich bars into their businesses and are having great success. The humble old baguette that they were getting €2.20 for, they are now cutting in half and adding filling and turning it into €7-8 product.
If we look at the success of Subway here, we know there is market share available, and again we have the upper hand being able to offer a wider range of breads and fillings that will allow us to compete strongly.
Does this mean we should stop selling sandwich bread? No, of course not, but work on the quality to try and attain a point of difference as much as possible. There are still big opportunities also in incorporating some preferment-based products into your range that will again create a point of difference and offer greater flavour and higher nutritional promotional opportunities.
More than ever before, it will be important to continue to educate and up-skill both yourself and your staff. Poor quality copies of preferment-style breads, using chemical improvers, will not cut it any longer. Your customers in many cases will be too well travelled and food educated, and will be expecting the authentic article.
If you can provide these products and meet their expectations, even go so far as to create an experience that reminds them of their trip to Europe through taste or ambience, you will be well positioned to capture new customers and markets that will safe guard your sales against larger players.
One thing is for sure, things are changing and in all areas of baking and the business of baking and if we don’t adapt we can get left behind.
Look at what you can do, not what you can’t.