Burned by the pandemic, in-store bakeries are on the rise

Grocery store bakeries, hard hit by the pandemic, are on the rise again, according to a first-of-its-kind report released this week by FMI-The Food Industry Association.

In-store bakeries have seen an almost-full recovery of unit sales compared to 2019 and dollar sales are up 21.3% compared to pre-pandemic, according to FMI’s “The Power of In-Store Bakery” report.

Bakery unit sales are up 7.4% and dollar sales are up 14.3%, the report found.

“While many fresh departments in the grocery store are seeing decreased sales this year, the in-store bakery has seen strong increases in dollar and unit sales,” FMI noted. “Household penetration for in-store bakery remains high with purchase frequency and size up.”

More than 82% of Americans purchased items at least one in the past year for their grocer’s in-store bakery, according to NeilsenIQ data cited in the report, with average purchase frequency of about once a month, up 3.6%. Shoppers spent, on average, $5.55 on bakery purchases, up 10.4%.

So, what are consumers buying from the bakery department?

Dollar sales of muffins jumped 24.2% this year, the report found, followed by cupcakes (up 23.6%) and cookies (up 21.7%). Cakes, followed by cookies, are the department’s biggest sellers.

Unit sales of pies, though, dropped 23%, followed by artisan breads, which are down 1.3%.

“Retailers have the opportunity to capture a much larger share of bakery sale, especially in the higher-margin indulgent and special occasion products,” FMI found. “Shoppers are spreading their bakery dollars around to many channels. Cultural or ethnic options are in demand and appeal to key segments of shoppers such as younger shoppers with families who have higher household incomes and spend more on groceries.”

The biggest driver of bakery sales is freshness, the report found, with shoppers seeking out words such as “baked today,” “made in-store” and “made by our professional bakers.” Shoppers like to know when a product was baked to determine its freshness, and most said they believe the in-store bakery to offer fresher products than the commercial bakery aisle.

“From the shoppers’ point of view, the in-store bakery is clearly better than the commercial bakery aisle for freshness and taste of products,” the report found. “Service and quality of ingredients are also perceived to be better from the in-store bakery than the commercial bakery aisle. Meanwhile, the commercial bakery aisle is perceived to be better than the in-store bakery on price and providing nutritional information.”