Academic journal article American Journal of Entrepreneurship

Bailey's Fudge: Product Entry into Regional Wal-Mart

Academic journal article American Journal of Entrepreneurship

Bailey's Fudge: Product Entry into Regional Wal-Mart

Article excerpt

Introduction

Bailey's Fudge and Fine Gifts, Inc. opened on October 25, 2003. Fifty-seven year old Ruth and her two middle aged daughters, Melissa and Rebecca had experienced success with previous entrepreneurial ventures and wanted to diversify and to try something new. The original idea of this small family owned business was to serve as a hobby and creative outlet for owner, Ruth. She wanted to open a specialty store with homemade foods for working families. The family members debated on various homemade options including carry out dinner dishes and casseroles or soups. But in the end, due to county health department licenses, facility requirements and overall vision of the entrepreneurs, they decided to open a fudge shop. Ruth had always been known among friends and family as an outstanding cook overall, but her specialty was desserts and fudge was one of her areas of expertise. As a compliment to the homemade fudge outlet, the entrepreneurs built a floor space for specialty gift items creating a venue for high quality and exclusive specialty gifts for special occasions. In an effort to divide responsibilities within the family owned business, Ruth would be in charge of producing the fudge, Rebecca would be in charge of ordering specialty items and store design, and Melissa would be in charge of the financial aspects of the new venture. The store was named Bailey's after Ruth's Grandmother, Bertha Bailey who had been an inspiration to Ruth in the kitchen.

While the core business of Bailey's Fudge has remained the same over the years, the owners have attempted to meet the need of various customers by adding various products. The store began with only a fudge counter and a few specialty gift items. Over time, the store has added candles, coffee beans, specialty food items, homemade desserts, freshly roasted nuts and a full service coffee and smoothie bar. During the Christmas season, Bailey's Fudge makes gift baskets for various commercial clients such as banks and real estate companies. The store specializes in home-made goodness.

Over the years, Bailey's Fudge Has been able to build a solid following in Quincy, Illinois, where the store is located. Ruth has consistently provided the community with a large variety of homemade fudge flavors. Most days she has twenty-three different flavors of fudge available in the store with four different sucrose-free flavors for diabetic customers. Customers often visit the store to talk to Ruth and watch her make the fudge. Ruth lives approximately one hour from the store and has a regular routine of traveling to Quincy to make fudge on Monday, Wednesday and Friday mornings. The retail store is located in a high traffic area in a strip mall with busy stores nearby. While the client base has grown significantly each year, it became evident to the owner early on that fudge was a highly seasonal product with a busy season during the fall and into the Christmas and New Year holidays. Valentine's Day has also proven popular for fudge sales. Due to the seasonal sales, difficulty comes in the summer months when the warm humid Midwest weather seems to deplete the local appetite for sweet tasting fudge. In an effort to supplement fudge sales over summer months, the owner increased specialty gift items but has often struggled with cash flow and large inventory costs.

As a result of unusual circumstances, what started out as a specialty store has morphed into a distributor of fudge to local Wal-Mart stores. The owner of the store is faced with questions and challenges concerning production, cash flow, image, pricing and distribution.

Background

During the spring of 2007, a local Wal-Mart store manager, James Litz, visited Bailey's and sampled some of the fudge. He immediately fell in love with the product and told Ruth that he was interested in carring the fudge in his store. He encouraged her to contact Wal-Mart headquarters in Arkansas to begin the approval process for carrying fudge in his Wal-Mart store. …

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