Saturday, June 18, 2011

Donut Omit the Indulgent

Krispy Kreme’s getting healthier. First off, I’m talking about their stock price, which has doubled over the past year. Yesterday alone, the value increased more than 6% to a 52-week high.
     Many retailing experts had assumed the company was dead. Those experts credit the leadership of current president and chief executive Jim Morgan for the resurrection. According to articles in Bloomberg Businessweek and the Winston-Salem Journal—the newspaper of record in the town where Krispy Kreme was founded—one among many profitable changes is the introduction of new offerings.
     This is the other way Krispy Kreme is getting healthier. The stores are adding yogurt, oatmeal, and fresh fruit juices, for instance.
     Krispy Kreme isn’t alone. In 2009, John Mackey, CEO of grocer Whole Foods, announced he was moving the merchandising away from gourmet chocolates and their kin, and moving the labeling toward nutrition-density. Nutrition-density labeling shows the amount of nutrients per item volume. Since its founding, Whole Foods has profited from having introduced food items—such as sea salts and truffle oil—which fit the label “organic” better than the label “healthful.”
     If you view the decisions of Messrs. Morgan and Mackey as a model for your own retailing, don’t go to extremes. A range of studies have shown that consumers continue to want indulgences, even in these economically tough times—and some say especially in these tough times. A research team from City University of New York, Loyola College, and Duke University found that when a healthy salad was added to a list of side dish choices, diners separately identified as high in self-control actually became more likely to order the French fries.
     Offer a small frivolity that isn’t too expensive. That description is important to keep in mind as you interpret the Whole Foods and Krispy Kreme changes. Shoppers have moved from frivolity toward frugality. Among the indulgences available at Whole Foods were not only quite expensive items, but also ostentatious items. Consider the fountains spewing out melted chocolate which allowed shoppers to fresh-dip their organic turnips or whatever else they chose. In the face of the Great Recession, sales of the indulgences plummeted.
     You’ll want to decide how to best balance healthy with indulgent in your own merchandising. And you’ll want to move the balance point between the two over time. While doing this, do remember that nothing goes better with yogurt than a warm donut.

Click below for more:
Balance Healthy and Indulgent in Merchandise
Have Fun Items Throughout the Store

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