In the grocery store, the bakery has a unique position in that the majority of its sales are from impulse purchases, but one that’s fairly easy to justify, as they’re small treats. Progressive Grocer’s 2018 Retail Bakery Review takes a look at the state of the department nationwide.
The percent of sales the department contributes to overall store sales also dropped a bit. The number had hovered at slightly above 7 percent for the past three years, but has now dipped down to 6.4 percent. However, optimism about future sales is higher than last year, with 65 percent indicating that they expect sales to increase for 2018 when compared with 2017; last year, it was only 60.9 percent. The percentage of the expected sales increase for 2018 also is higher than it was last year, with respondents expecting sales to rise 8.3 percent this year, while the expected growth last year was only 7.8 percent.
Bakery sales are having an impact on labor as well. Kimberly Holleman, category buyer for Houston-based Fiesta Mart, who notes that sales have been flat for her department, adds that the reliance on part-time labor is increasing.
“I see that a lot in the industry itself, really,” Holleman says. “Nobody wants to continue to put the labor into it. It’s still a labor crunch. We want to do more with less.”
Holleman points out that some of the movement away from scratch baking could be due to labeling regulations.
“You have the nutritional labeling, and the importance of all that being so accurate nowadays — I think that has a lot to do with it as well,” she says.
All Hail Cookies
As for popular products, cookies seem to be reigning supreme. The product was noted by the most respondents (45.5 percent) as the top-selling bakery item, rising up from the third spot on the top-selling list last year. Cookies also ranked first on the most profitable list, with 20.9 percent citing them as the most profitable bakery item. When these two lists align, it means good things and may explain why the optimism for next year’s sales and profits is high.
Another highly profitable item, cakes, coming in second on the most profitable list, fell in popularity this year from the top of the list in 2017 to third in best-selling products. It was at the top of both profitability and best-selling lists last year. However, this year, PG distinguished between custom-decorated cakes and everyday cakes/tortes, which may be part of the reason for the drop in the ratings.
When it comes to issues facing the bakery department, the No. 1 concern is customer satisfaction. While nearly half (45 percent) of consumers indicated that they shopped the in-store bakery at least once a week in PG’s June Consumer Insights survey, keeping them coming back is vital. Product quality tied for third in the top five concerns for the bakery department, which tends to go hand in hand with customer satisfaction.
“I’m upgrading quality in every category,” Downey asserts. “Our customers, our demographic, are very, very smart customers. So if you give a customer who’s educated a better product, they certainly do not mind paying 50 cents more for it.”