Sponsored By

Grocers try to pull shoppers into bakery despite high prices

Retailers are looking to boost activity in the sector with unique, higher-quality, and healthier selections

Richard Mitchell

November 21, 2023

5 Min Read
SpartanNash-bakery.png
Despite higher prices, the in-store bakery remains a high-performing perimeter department.SpartanNash Co.

Shoppers hitting up the supermarket bakery are discovering that the price of indulgence is getting steeper.

Most perimeter bakery categories have been registering double-digit price increases of late, with a subsequent decrease in volume sales for the majority, reports Circana, a Chicago-based market research firm.

Going against the trend are donuts and cookies, which had volume sales gains of 5.5% and 1.4%, respectively, despite per unit cost increases of 16.7% and 10.5% for the 52 weeks ending Sept. 10, 2023.

Also on the upswing were croissants, and buns and rolls, with unit sales increases of 3.8% and 1.8%, respectively, and price gains of 11.3% and 14.5%. The average cost of specialty desserts rose 22.8%, the largest price jump, with a 5.7% decrease in unit sales.

210-Analytics-bakery.png

Buns and rolls are among the minority of bakery categories experiencing unit sales increases.

“Consumers are cutting back on non-essentials but still want to indulge,” said Melissa Altobelli, principal of client insights for Circana’s bakery vertical. “They want a sweet treat and the appeal of the perimeter bakery is that shoppers have the option of purchasing what they want, such as one donut, and know they are going to consume the whole thing, even if it may cost more on a per volume basis,” she said.

While the perimeter bakery is still a top-performing supermarket department, operators are in position to drive further growth by providing more health-related offerings, including low-carbohydrate selections, and additional unique sweet goods with exciting flavors and tastes, Altobelli said.

“We have seen a shift towards shoppers not just looking to taste high-quality desserts and baked goods, but seeking healthier and local items that are both better-for-you and better-for-the-planet,” said Tristan Ambrose, retail deli merchandiser for PCC Community Markets, a Seattle-based chain of 16 Seattle-area stores.

In response, PCC is offering vegan and gluten-free varieties, more organic options, nutritive-dense products, and selections containing whole grains and less refined sugar, she said. The retailer also uses more sustainable packaging and includes locally milled flours in all in-house baked goods.

PCC is spotlighting its fresh bakery offerings via social media, e-mail marketing, the company website, and in-store signage, while also educating staff to turn the associates into “expert sources,” Ambrose said.

A challenge is attracting more customers in the competitive bakery landscape and merchandising high-quality products that come with higher prices, Ambrose said. “We’re expanding our house baked goods and desserts to hone-in customer preferences informed by market research to create unique, exclusive items to PCC,” she said.

While a wide array of offerings will help attract all consumer segments to in-store bakeries, different age groups tend to purchase disparate selections, said Anne-Marie Roerink, president of 210 Analytics LLC, a San Antonio-based market research and marketing strategies firm and a developer of the Life Through the Lens of Bakery report.

She said that Boomers often buy pies at an above average rate while Gen Z and Millennials will usually purchase more flatbreads and fresh tortillas.

Engagement with celebratory items, meanwhile, often differs by area. Cakes and cupcakes, for instance, usually sell better in suburban locations because of the higher propensity of families with children, Roerink said.

SpartanNash-bakery-cake.png

SpartanNash-operated bakeries feature cakes that associates assemble in stores.

The attractiveness of such baked goods and a shopper focus on creating indulgent experiences is resulting in an uptick in bakery department visits at banners operated by Byron Center, Mich.-based SpartanNash Co., said Amy McClellan, senior vice president and chief marketing officer. “Ensuring customers have a variety of choices at compelling price points is key to offering solutions to shoppers’ sweet cravings and entertaining needs,” she said.

Bakery selections at SpartanNash stores often vary by season, McClellan said, noting that fall options include pumpkin-spiced items and varieties of donuts, donut holes, cupcakes, and cookies in the reds, browns, and oranges of a fall harvest. “It is critical that we are offering the right products to keep up with impulse demand,” she said.

SpartanNash operates 144 corporate-owned grocery stores in nine Midwest states and distributes to more than 2,100 independent retail locations throughout the country. Primary retail banners include Family Fare, Martin’s Super Markets, and D&W Fresh Market.

The operator’s focus on quality includes making buttercream icings from scratch using a proprietary recipe with all fresh ingredients in its central bakery, McClellan said. In addition, cakes are hand-assembled and decorated in stores for premium freshness and superior eye-appeal, she said. Varieties include old fashioned vanilla, signature chocolate, black forest (dark chocolate cherry), lemon supreme, carrot, and red velvet, with signature two-layer 8-inch cakes that are available whole and in slices the best sellers.

SpartanNash this year launched a self-guided virtual learning program for its in-store cake decorators to improve consistency in the preparation of the signature two-layer cakes while making training time in stores more effective, McClellan said.

Because bakery department purchases are often impulse buys, SpartanNash is enhancing the visual appeal of products to drive activity, while also leveraging digital ads and providing recipes, she said. “Post-pandemic gatherings and a return to family tradition have provided an opportunity for us to drive occasion-based trips, both planned and impromptu,” McClellan said.

Supermarkets also will likely spur sales by including fresh bakery selections in cross-merchandising displays in different areas of the store, Roerink said. That can include hamburger buns near ground beef or premium patties; upscale crackers alongside charcuterie-type items; and pies and angel food cake in produce. “More than anything, consumers are looking for solutions and not departmental silos,” she said.

Because freshness is the top demand for perimeter bakery shoppers, it is essential that items move fast and operators align production with shopping patterns, Roerink said. “The in-store bakery is centric to celebrations and special occasions and that’s exactly when shoppers are a bit more likely to splurge amid significant financial pressure,” she said.

About the Author

Richard Mitchell

Richard Mitchell has been reporting on supermarket developments for more than 15 years. He was editor-in-chief of publications covering the retail meat and poultry, deli, refrigerated and frozen foods, and perishables sectors and has written extensively on meat and poultry processing and store brands. Mitchell has a bachelor's degree in journalism from the University of South Carolina.

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like