Using the candy category as a reference, a university study recently concluded that food specialty stores do not have to compete with supermarket prices to increase sales.
Researchers from the University at Buffalo School of Management analyzed data from 225 households, comparing candy sales in supermarkets to sales in specialized confectionery stores. They found that consumers preferred buying premium items, like boxed chocolates, from the specialty stores and were not averse to paying higher prices for them in comparison to similar items at supermarkets.
Consumers were also found to be more likely to buy additional premium candies when at confectionary stores than they were to buy such related items at supermarkets.
Finally, the researchers found that promotions featuring sale prices at the specialty stores did not have as great an effect on increasing sales as similar lower-price promotions at the larger chains. Instead, consumers responded more favorably to promotions featuring seasonal or holiday themes, such as Valentine's Day or Easter items at specialty stores.
The researchers concluded that specialty food retailers can benefit by "adjusting their sales strategy to focus on premium selection, cross-category items and holiday promotions, rather than price cuts, to increase sales."
Generally, should niche food specialty stores avoid promoting value options within their stores?