Indulgence is a 'clear sales driver' of the bakery department, report finds

By Mary Ellen Shoup contact

- Last updated on GMT

©GettyImages / milanfoto
©GettyImages / milanfoto

Related tags: FMI, Bakery, Baked goods

The bakery category, which falls between produce and frozen in terms of dollar sales, is a huge driver of in-store trips, bringing shoppers to the store at least once a week, yet there are some untapped opportunities for retailers to increase consumption frequency and household penetration of baked items, according to a joint report by the American Bakers Association (ABA) and Food Marketing Institute (FMI) sponsored by Corbion.

According to the report -- which was initiated and funded by ABA -- total bread and baked goods US retail sales surpassed $59bn in 2018, split between the fresh bakery department and items located in the grocery, frozen and dairy departments. In-store bakery sales were $13.8bn and are dominated by desserts, sweet goods and cookies, whereas center-store sales are more evenly balanced between functional and indulgent items. 

Dual-store strategy and indulgence a sales driver

Channel switching is strongly tied to bakery purchases, according to the ABA-FMI Power of Bakery study, with 37% of shoppers saying that they typically purchase indulgent bakery items at a place other than their primary store (where they go to pick up center-store items).

"Channel switching is highest for special occasion items, such as birthday cakes/cupcakes, and lowest for functional items. Stand-alone bakery specialty stores take a majority share of the switchers across all three categories,"​ the study noted. 

Creating a bakery destination with eye-catching displays of freshly baked breads and desserts with knowledgeable staff ready to assist at a shopper's primary store is an effective strategy to drive bakery sales, according to Rick Stein, FMI vice president, fresh foods.

"Being a top-of-mind bakery destination is important to capture the category’s many trips among primary and secondary shoppers,"​ the study said. 

“Indulgence is a clear sales driver in fresh bakery, claiming 76% of the total department sales, and the analysis highlights the importance of segmenting audiences to better align innovation, merchandising and marketing. For instance, given that millennials are nearly twice as likely to exclusively shop the in-store bakery as boomers, at 30% versus 17%, carrying and highlighting desirable product attributes and claims may help drive sales and loyalty depending upon your store’s demographic,”​ said Stein.

The study also found that the top words associated with the word "bakery" were emotionally-charged words such as "yummy" and "love".

"While it remains important to meet consumers’ desires for functional attributes, the data shows there is power in satisfying a customer’s emotion to drive sales,"​ according to the study. 

"Fresh"​ also matters when it comes to the bakery section of stores, according to ABA and FMI research, whose research revealed that “fresh”​ and “baked today”​ are the two most popular production-related claims out of the list of 12 options. When asked to define freshness, particularly as it relates to functional bakery items, shoppers first point to the date and time. 

Personalized, partially prepared win over consumers

More than three-quarters of shoppers want the ability to personalize when purchasing bakery items, but this does not necessarily mean items need to be made from scratch to shoppers’ personal preferences, according to the study. In fact, 42% prefer pre-packaged items but with the ability to personalize. While most shoppers believe scratch baking delivers superior quality, 57%  are indifferent to their store using partially-prepared/baked ingredients. 

President and CEO of the American Bakers Association, Robb MacKie, commented in the report, “Consumers are clearly looking for healthy ingredients to drive their dietary habits and bakers will need to leverage their products’ positive health attributes. However, bakers and retailers need to connect with consumers, give them opportunities to smell, touch and taste their products. That is what drives the emotional connection to the category, regardless of product segment.”

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