Greggs on a roll

By Lynda Searby

- Last updated on GMT

Related tags Sausage Starbucks

British bakery Greggs is managing to defy the high-street slump with price promotions, innovation and an increased focus on the take-home market.

At the end of last week, the retailer, which sells bread, sandwiches, savouries and cakes to more than six million customers a week, said sales at stores open over a year rose 0.8 per cent in the 13 weeks to 1 October 2011, its fiscal third quarter. That compares with a rise of 0.4 per cent in the first-half to 2 July. Total sales rose 5.4 per cent, reflecting 53 new store openings in the year to date.

In a press conference last Thursday, chief executive Ken McMeikan told reporters this positive growth was down to increasing sales of breakfast sandwiches and coffee, and investment in promotions and innovations such as its Superstar donuts.

Superstar donuts

The Jaffa Cake, Strawberry Milkshake, Coconut Snowball and Triple Choc Vanilla donuts each have individual characters, and consumers can vote for their favourite in an X Factor-style on-line poll.

“We launched Superstar donuts five weeks ago and have sold nearly 1.5 million so far. They have captured the imagination of consumers, which we believe is down to a combination of great taste and value,” ​said McMeikan.

Besides new product development, price promotions on existing products have helped the baker to increase its average transaction value at a time when there are fewer shoppers with less money on the high street.

“Consumers have less money in their pockets, therefore we recognised the need to invest more in promotions because they are looking to make their money go as far as possible. I don’t think it’s any coincidence that by putting on meal deals and ‘two for’ offers, we are selling more,” ​said McMeikan.

He added: “The other thing we’re seeing is that within each category the lower priced products are selling well, for example the £1 sandwich and the sausage roll.”

Partnership with Iceland

Going forwards, the company is hoping that a deal with frozen food retailer Iceland to sell Greggs branded frozen sausage rolls in 700 stores nationwide will help it to reach new customers.

“We see that the sale of frozen sausage rolls in Iceland is really getting at the customer that wants to bake sausage rolls at their convenience, rather than a sausage roll that has historically been a food-on-the-go offer from Greggs,”​ said McMeikan.

The Iceland deal is part of an overall strategy to capitalise more on the ‘take home’ market, a focus which is likely to inform future ranging decisions.

Another avenue for expansion is coffee shops. Greggs is currently trialling a new coffee shop format called Greggs Moment in Newcastle, with the aim of gauging the potential for Greggs in the growing coffee shop market.

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