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Is Wal-Mart’s Scratch Bakery Idea Scaleable?

Jim Prevor’s Perishable Pundit, September 13, 2006

One interesting point regarding Wal-Mart’s announcement that they were intending to segment their stores is one of the examples they gave:

In Houston, one store is adopting a Hispanic identity, in part by offering more Hispanic grocery products, a fresh-from-scratch bakery and selling 300 to 500 breakfast tacos a day.

The results relative to other Houston Supercenters include sales per square foot that are 7.6 percent higher and a higher gross margin, which means more profits per item sold.

I am sure Wal-Mart is telling the truth, but I take the sales and margin numbers with a grain of salt when it comes to projecting the success of a roll out.

Wal-Mart is a big, powerful and talented organization, and when it is focused it can achieve a lot. That is the danger of doing a few prototypes. We know when everyone is paying attention, they can succeed but the challenge for Wal-Mart is not what is a good idea, but what is scaleable.

Foodservice items, such as the breakfast tacos, absolutely vary by region and ethnic group. In fact those breakfast tacos, if placed in the “Hispanic” store concept they put in the Cuban communities of South Florida won’t go very far because that is not what Cubans eat. You need Cubano sandwiches and Cuban coffee.

But putting an egg, cheese and some ham in a taco with some salsa isn’t much more difficult than putting egg, cheese and some ham on an English Muffin, bagel or a croissant, so one wonders what the manager of that store was doing to make his store a “Store of the Community” if he had to wait for this initiative to figure that one out.

The scratch bakery is interesting, because bakery is also a very ethnic product. A good Jewish bakery can drive traffic as can a good Italian one, and the sweet cakes of the Caribbean are a completely different product than are sold in either the Jewish or Italian variety.

But scratch bakery is as much an art as a science. One wonders if it is a scaleable solution to whatever Wal-Mart’s issues may be.

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