Bakery has an enormous consumer following across grocery retail, and the path to further advancing engagement is to truly understand shopper preferences.
That is a clear insight from a first-time, comprehensive report, Power of Bakery, which was unveiled during a session of the American Bakers Association Convention this month in Naples, Fla., along with guidance on how to benefit from the findings. The research was conducted in partnership with the Food Marketing Institute (FMI) by 210 Analytics, LLC and Todd Hale, LLC and was sponsored by Corbion.
“Household bakery penetration is very high at 99.9 percent,” said Anne-Marie Roerink, a Principal at 210 Analytics, who spoke at the ABA session. “But driving more consumption is still one of the biggest opportunities, and to do that, we have to think like shoppers. Often at retail you have different departments that don’t play together very well. But shoppers come into stores to buy a meal. We need to put sliced bread next to deli soup, or burgers with buns, because we still have so much of an opportunity to drive bakery sales much further.”
The inaugural Power of Bakery report provides the deepest lens to date on the baked goods preferences of consumers and guidance for bakers and retailers on next steps. The research groups items into three categories based on usage occasions: functional items, such as bread, buns and rolls; indulgent items/desserts; and special occasion items, which include birthday cakes. The report points to the impact of specific ingredients and health callouts, the need to understand how consumers perceive “fresh,” and the widespread shopper acceptance of partially-prepared baked items. Shopper data was collected using an online survey among a national sample of 1,500 primary and secondary U.S. shoppers.
Impact Across Departments
The study underscores the powerful impact of bread and baked goods across store departments and retail channels. Bread and baked goods recorded more than $59.7 billion in sales in 2018. This dollar figure includes $39.8 billion in grocery, $13.8 billion for in-store bakery, $3.6 billion frozen, $2.48 billion dairy, and $8.2 million deli.
“This shows the true power of bakery,” said Todd Hale, Principal, Todd Hale, LLC.
However, he added, “conversion rates leave ample room for improvement.”
While 74 percent of shoppers purchase functional bakery items at their primary stores, the rate is only 63 percent for indulgent items and desserts, and 40 percent for special occasion items. The report urges retailers to drive cross-usage to benefit from trip frequency in the bakery aisle and impulse in the in-store bakery.
“Retailers need to make sure they are real destinations for the in-store bakery or the commercial bread/baked goods aisle to differentiate themselves and win shoppers,” Hale said.
Power of Emotion Huge
The report spotlights how emotion drives consumer perspectives about bakery. Consumers associate bakery with positive words such as delicious, great, wonderful smell and aroma, yummy and tasty.
“One female respondent said it makes her think back to her childhood, when she and her grandmother would go to the bakery and buy cupcakes,” Roerink said. “So how can we recreate that experience for this lady, and even for her children and grandchildren.”
The research found that emotionally engaged consumers are three times more likely to recommend and re-purchase, less likely to shop around, and considerably less price sensitive.
Tailoring Claims for Audiences
The research takes a deep dive into how health and well-being claims play out between functional and indulgent bakery items.
Some 74 percent of consumers look for one or more specific ingredients when buying functional bakery items, including whole gran, multi-grain, and ‘no artificial ingredients.’
The picture is dramatically different for indulgent items and desserts. In those segments, the role of health, nutrition and better-for-you choices has considerably less impact, with 36 percent saying “no influence.”
Hale said it’s important to understand how claims impact various shopper groups in different ways.
“You need to keep your eye on whether the claims are driving growth or not,” he advised.
ABA will conduct a webinar about the research on April 17, 2019 at 2pm ET.
The association will continue to relay insights from the research in the coming months to keep this important topic on the front burner of the industry.
-About the Author- David Orgel is an award-winning business journalist, food industry expert and speaker. He currently is the principal of David Orgel Consulting LLC, delivering strategic content and counsel to the food, retail and CPG industries.