6% of all bakeries in Canada within the province, it's clear that a uniquely positioned bakery could have a significant market potential in the Vancouver market specifically.
With 211 total retail bakery outlets in all of British Columbia, the proposed bakery and party supplies story would just several key competitors. The following table provides an analysis of the proposed retail stores' key competitors in Vancouver:
Competitors to Bakery & Party Store
Anna's Cake House
Regularly wins awards and honors for their cakes and pastries; could easily move into offering party supplies as the demographic groups they sell into are likely to throw their own parities vs. cater one
Lack of retail space for starting a party store; lack of knowledge of that aspect of retailing will limit the stores' ability to move successfully into this market.
Cause for Celebration
The most serious competitor to the proposed store concept; this retail outlet specializes in wedding and special occasion cakes.
Lack of experience in retailing party supplies; sells to a higher-end demographic that may consider catering as well;
Lesley Stowe Fine Foods
Well known as one of the best caterers in Vancouver; expertise in event planning and special occasions; is a special events business first and bakery second.
Potentially difficult for the company to move down-market after getting accustomed to the higher margins possible on event catering.
Lighthouse Cake Company
Specializes in cakes for special occasions and is family owned and operated.
Despite this stores' excellent reputation for cakes, it may find the move into party supplies difficult as their core business is more about bakery than merchandising and product sales.
Sandy's Home-Style Baking Company
Specializes in desserts and catered meals; looking to move into the home dinner segment with cook-to-order meals for take-out.
Well known for their pastries, this potential competitor would consider moving more into catering than supplies.
The Valley Bakery
Began 43 years ago and is highly respected for its use of natural ingredients; health conscious also with a pastries line of products as well;
Not nearly as well-known in the event catering arena; despite the high level of awareness of this specific competitor the inclusion of party supplies does not fit with their market segments
WOW! Factor Desserts
Well capitalized and has a run rate of $75M / year in revenues; brand recognition throughout the British Columbia area; focus on production of events as well
Better known for their high-end desserts than their concentration on events; attracts higher-end clientele that looks to cater events (many businesses use WOW!) factor for events for example
Of all the competitors for the proposed store concept, Cause for Celebration would be the biggest potential threat. Of all specialty bakeries, the seven listed above were the highest rated from business directories covering the Vancouver metro area.
The following are the hidden risks of launching a business that has both specialty cakes and party supplies in the same location:
The risk of cannibalization from larger supermarkets including Wal-Mart's grocery department. The most major competitive threat is from the bundling that larger supermarkets do with cakes and party favors. The weakness of this risk is that the quality of cakes from supermarkets is often quite bad, and the merchandise generic or even inappropriate for the event. By having a very high quality reputation of cakes and desserts (to the level of Anna's Cake House or Cause for Celebration) this issue could potentially be overcome.
Lack of differentiation for specific types of celebrations and parties could also lead to market failure. It would not be a good idea to launch this business specifically to focus on broad, larger parties. Instead, it would be better to focus on ethnically-themed parties for the Chinese community for example. Having the bakery concentrate only on cakes and desserts that are for a specific ethnic background, along with the party supplies that were specific to the ethnic group would assure higher levels of differentiation and increase the potential for success.
Sales assumptions must build in long-term market awareness strategies. Time must be allocated in the financial assumptions of the business to allow for awareness of the store to…