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The younger crowd also is not one to over-indulge, which means single servings of desserts and other items are now starting to move more rapidly.

In-store bakery focuses on the young, single portions

Younger shoppers want single-serve items and more variety

Over the last several months, sales for most categories have been up due to inflation, but unit sales have been down. That is not the case for in-store bakery. Sales have been inflated and unit sales have either been flat or up slightly. According to the latest International Dairy Deli Bakery Association (IDDBA) research, 2022 showed $3.3 billion in total in-store bakery sales, with $1.9 billion coming from the center store and $1.4 billion coming from the perimeter.

The social media shopper

The needs of shoppers are also evolving in this category. Where Baby Boomers are used to going aisle by aisle to find the products they want, Gen Xers and Millennials shop differently, and grocers need to change the way they do things if in-store bakery is going to continue to thrive. The younger consumer is looking for personalized offers via social media. So, if you have a sale on turnovers, you better take to TikTok or Instagram. The new shopper is not going down every aisle. They are coming with an agenda (if they come in person at all) and are approaching the shelves in a targeted fashion.

“That whole under-40 generation is not visiting the in-store bakery as frequently as the Baby Boomer generation did,” said Jonna Parker, principal of fresh foods for Circana (formerly IRI). “So you need to leverage social media and digital advertising to the right audience to make a play there.”

Parker pointed to the overnight success of Costco’s chocolate peanut butter pie. The dessert experienced its moment on social media; and shoppers went nuts.

“If that is not proof perimeter bakery can create a viral adventure, I don’t know what is,” Parker said.

The younger crowd also is not one to overindulge, which means single servings of desserts and other items are now starting to move more rapidly.

“[Gen Zs and Millennials] are not big leftover eaters,” said Rick Stein, vice president of Fresh Foods at the Food Industry Association (FMI). “So we are seeing that single-serving section really being expanded. We’re seeing our members really start to gravitate to these grab-and-go items.”

Parker said that buying enthusiasm is linked to the emergence of the perimeter of the in-store bakery, where a lot of these single servings are put out on display.

Under-40 buyers also demand freshness, but there’s also a contradiction to that behavior, which is that younger consumers typically have bought food at night when the bakery staff is long gone. The habit is changing, and more buyers are starting to come earlier in the day. Still, it is creating an issue for store managers who are looking to offer the freshest items possible.

This is where baked goods with longer shelf lives are thriving, particularly at the supercenters. Families also appreciate food with a longer sell-by date.

Other emerging bakery trends include variety (taste and size) as well as international flavors.

“That’s a growing part of the business we really have not seen in the last several years,” Whitney Atkins, global marketing vice president at IDDBA, said. “I think [bakers] were very innovative during COVID and they took that time to learn how to really hit the consumers in some different ways.

Atkins said Asian flavors are ranking high among shoppers. Ube, a purple yam with a nutty vanilla flavor, is native to Southeast Asia and predominantly used in Filipino cuisine. Another flavor is Yuzu, a Japanese citrus lemon valued for it’s highly aromatic rind. Blends of spicey-sweet are also hot right now, Atkins said.

Gathering at home

Since the COVID-19 pandemic, work from home flexibility has increased for many, and higher prices are impacting the abilities of families to eat out. According to first quarter numbers from IDDBA, 29% of Americans work from home at least twice a week. That number is down compared to 2021 (47%) and 2022 (41%).

Rochester, N.Y.-based Wegmans said it has been affected by an increase in remote work. The company is currently testing a pilot moving towards self-serve coffee stations, citing an increase in work-from-home as a pain point to its full-service coffee options.

Yet other parts of bakery are still rebounding from pandemic-related changes in behavior.

“Some of the issues on donuts probably stem from how it got really hurt during COVID because you could not buy single donuts anymore,” Stein said. “I think as that department has reopened up now and back into full selection consumers can go back to picking.”

Atkins said just the excitement of selecting your own donuts post COVID has helped lead the resurgence.

The pandemic also drove a trend of making dishes from scratch, especially with regard to desserts. However, inflation is now contributing to a perception that buying individual ingredients may be more expensive than grabbing something out of the bakery.

Convenience and time also are king when it comes to households with busy schedules. Stein said more households are bringing premade dinners into the home, and with that comes the sweet after meal.

Gatherings also continue to be on the rise, and many happen at the home. Pool parties, game nights and holiday events also are another way consumers are combating inflation, according to Parker.

The grocers capitalizing on those types of events are the ones leaning into advertising that highlights bakery’s role. For pool parties, it might be an illustration showing kids getting together and offering a food solution like brownies.

Creating messages that actually tie departments like deli and bakery also a solid strategy, according to Circana’s Parker, who said not enough retailers are leveraging the opportunity of events in this way.

If the struggle continues …

As for the rest of 2023, both FMI’s Stein and IDDBA’s Atkins believe the upward trend will continue with in-store bakery. Stein, however, sees the reason as being more dark than bright. He believes the economic slowdown will continue, at least through the end of the year, and bakery items always sell well when society is in need of a pick-me-up.

Atkins said she believes shoppers now have a broader purpose with in-store bakery. In past years, the visit to the cakes and pastries would be due to a special event. Today, a stop in the bakery section is just a regular part of the shopping trip.

Circana’s Joanna Parker, however, sees a slowdown coming.

“I think mathematically we are lapping inflation. It will be tough to grow on top of record growth.”

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