In-Store Bakery Trends: Icing on the Cake

Although comparable in-store bakery sales didn’t rise as high during the past 12 months as they did during the year-ago study, the department’s profits increased for almost two-thirds of respondents during the most recent measuring period, as revealed in the latest installment of Progressive Grocer’s 2010 annual Bakery Operations Review.

Among the foremost highlights of the annual “state of the bakery department” study that was again amassed from the direct input of a cross-section of supermarket bakery executives from around the county, 55 percent of retailers polled said their in-store bakery sales had increased during the 12-month measuring period ended March 31, 2010, vs. last year’s all-time-high of 73 percent reporting sales gains.

Despite the comparable taper-off in sales, though, only 10 percent of retail bakery officials experienced sales decreases, while the balance — 35.5 percent — reported that bakery sales remained the same

The upbeat story is much the same when looking ahead to the anticipated outlook for the next three quarters, for which 57.6 percent of respondents foresee same-store bakery sales increases, 6 percent forecast decreases and 36 percent predict status quo bakery sales, according to the study, which asks those with direct responsibility for bakery operations to assign statistical estimates for their average in-store bakery during the year-to-year measuring period.

Interestingly, although nearly 3 percent more sales were generated from the service bakery case in this year’s study, self-service products continued to be the predominant merchandising scheme for 75 percent of the department’s product mix.

The at-home eating movement continues to bode well for in-store bakeries, as affirmed by 55.6 percent of survey panelists, with another 33 percent indicating no drastic change in sales, and 11 percent who said sales decreased. As for the effect the at-home eating movement has had in the 12-month period on bakery unit volume, 57 percent — 10 percent more than last year — reported increases in bakery unit volume, with 37 percent indicating no change and 7 percent reporting decreases.

A peek inside the average bakery finds cakes, breads, cookies, doughnuts and rolls to be the department’s top five fastest-growing items during the past 12 months, paced next by pies, danishes/sweet rolls, muffins, whole grains and Hispanic items.

From a most-profitable-product standpoint, cakes topped the bakery leader board, followed next by doughnuts. Breads, cookies and rolls were cited next as the most profitable bakery products, paced by muffins and pies. In terms of the items deemed to be most popular (vs. profitable) among con¬sumers, doughnuts took top honors, while breads, cakes, cookies and rolls rounded out the popularity rankings.

Along these lines, the in-store bakery is ideally suited to profit from trends favoring “affordable indulgences,” such as bite-sized/smaller-portioned products and sugar-free items. Products that incorporate whole grains and good taste were also being sought out, as were environmentally friendly packaging options, which continued to be a key consideration to maintain product integrity with more sustainable containers.
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