The Power of Bakery 2019, an in-depth look at the retail bakery through the shoppers’ eyes, was updated with new consumer data at the International Baking Industry Exposition September 10 at the Las Vegas Convention Center.
The study, commissioned by the ABA in partnership with the Food Marketing Institute and sponsored by Corbion, looked at responses from 1,500 households and a Nielsen analysis of sales trends across a variety of outlets including grocery stores, club stores, dollar stores, mass merchandisers, supercenters, drug stores and convenience stores.
Opportunities to Increase Consumption Frequency
Todd Hale presenting the Power of Bakery Update at IBIE 2019
The study identifies three primary types of baked goods — functional, indulgent dessert items and special occasion. For functional items about 60% of households consume them less than three times a week.
“So there’s a lot of opportunities to increase the frequency of consumption,” said Todd Hale, President of Todd Hale LLC and one of the co-authors of the report. “And no surprise on the indulgence/dessert side that 41% of users only consume them less than once a week, so a lot of opportunities to think about how we get occasion-based merchandising and promotions to drive further consumption.”
When shopping for bakery items, supermarkets lead primary store choice at 51% with supercenters at 32%, limited assortment grocers at 8%, club stores at 6% and organic specialty stores at 3%.
Millennials are more likely to shop supercenters than any other group. They tend to shop less often and like the value of supercenters.
“You’ll see high competition for the primary store choice versus the primary bakery destination comes from specialty bakery stores for indulgence desserts and special occasion,” Hale said. “36% of the people who buy special occasion baked goods buy them in a specialty bakery or cupcake store, while 23% mentioned by indulgence desserts from those formats.
Grocery Store and Supercenter Competition
Hale said there are many channels that nibble at the bakery dollar for those who only make occasional bakery purchases. Bakery and cupcake stores take in 67% of sales, convenience stores 44%, farmers’ markets 38%, bakery outlet stores 38%, online ordering 23% and drug stores 22%.
If you are a grocery store or a supercenter, and you’re trying to compete with these small bakeries, what do you do?
“Well, you try to act like you are a bakery, too,” Hale said. “You remind shoppers of a strong reputation for baking or show off your expertise. Don’t be bashful, make sure to promote that you are good in not only the commercial side of the business but also the fresh.”
And don’t count yourself out on in-home baking. Hale recommends providing opportunities for consumers to decorate their own products or offer items like apple pie meal kits to give consumers the illusion that they’re creating things from scratch.”
Hale shared several ideas for creating customer engagement from designing a cookie walk or cakes kids can decorate to ringing a bell when hot bread comes out of store ovens.
This article is part of our series on the Power of Bakery 2019 Update. This post and the others give only a window into the the data available in the full Power of Bakery report, which is free to ABA Members. Others can receive it for a fee. Click here to access the full Power of Bakery Report.