Wants and Kneads

Although department sales dipped slightly, PG exclusive research reaffirms in-store bakeries’ role as image builders and fresh-success boosters.

Although rising in-store bakery (ISB) sales in recent years appear to be tapering off, the department remains an integral ingredient in supermarkets’ overall fresh statement, as re-affirmed by the latest findings of Progressive Grocer’s 2013 annual Bakery Operations Review.

When asked how they would best describe their companies’ in-store bakery programs, the role of the department as an image builder, as indicated on the chart that appears on page 106, was cited as most influential by more than half (56.3 percent) of participants responding to PG’s exclusive “state of the in-store bakery” annual research study. And though nearly one-third of panelists — 31.3 percent — classified their in-store bakeries as a requisite component of a one-stop-shopping format, a full quarter (25 percent) view their bakeries as destination departments and another place to differentiate and elevate their stores’ fresh success. The smallest percentage of this year’s bakery study panelists (12.5 percent) took a less enthusiastic view of their in-store bakeries’ role of offering merely basics and/or necessities.

The above insights, and related others herein, are among the key highlights of PG’s Bakery Operations Review, which is annually amassed from the direct input of supermarket bakery executives polled from around the county, who were asked to share benchmark estimates for their average in-store bakery operations in areas such as sales and profit performance and leading departmental challenges and opportunities during the 12-month measuring period ending May 2013.

In terms of sales penetration, as found on the chart appearing above left, overall results of the present bakery survey show little deviation from findings of the prior year, with increases reported among 61.9 percent of panelists, which was slightly better than last year’s 60.4 percent tally, but notably lower than the 68.2 percent gains reported two years ago. However, despite the economy’s showing the first signs of sustained recovery, many consumers are still clinging to pre-recession spending or are prioritizing other essential food purchases that often render baked goods moot when tallying the basket’s estimated total, as evidenced by decreased sales among 9.5 percent of respondents, with the remaining 28.6 percent reporting status quo comparable sales.

Nevertheless, as revealed on the chart on page 106, most retailers (69.7 percent) said they foresee a brighter bakery forecast for the next three fiscal operating quarters, with only 3.5 percent expecting declines and 26.8 percent expecting sales to remain the same. The same-store bakery profits picture is decidedly better, as they were found to be up among 58.7 percent of panelists. A much smaller percentage (13.5 percent) of supermarket bakery executives said profits are down, with 27.8 percent reporting unchanged profits.