C-store, club or grocery? Bakers need to decide where to play, says retail expert

By Kacey Culliney contact

- Last updated on GMT

Retail expert Todd Hale: 'It is about matching existing products with the shopper demand resident within each retail channel'
Retail expert Todd Hale: 'It is about matching existing products with the shopper demand resident within each retail channel'

Related tags: Dollar sales, Baker, Baking, Bakery, Bakers

Bakers must adapt products and merchandizing according to target retail channels because shopper behavior is very different in each, says a retail expert.

Supermarkets dominate dollar sales of fresh bread and baked goods in the US – pulling in between $20-25bn in 2014 and representing 58% of total dollar sales across retail, Nielsen data shows. However, dollar sales for the year remained flat and growth was seen in c-store (up 7.9%) and value channels – club, dollar and mass merchandizers (up 2.1%).

Todd Hale, retail expert and principle of his own market research firm, said these differences were important for bakers to understand.

“First and foremost, bakers need to decide where to play, as not all products may fit within these diverse retail channels,”​ he told BakeryandSnacks.com.

“It is about matching existing products with the shopper demand resident within each retail channel. A product that matches the higher-income profile within the club channel will likely not work in most dollar or convenience store retail formats, for example.”

He said bakers also had to assess whether existing products and format sizes used in supermarkets were appropriate for other retail channels or whether there was a need to change pack sizes.

Diversify but stay supermarket-strong

While growth was strongest outside supermarket stores, Hale said it was important bakers maintained strength in this channel.

However, he said manufacturers could seek out those driving growth. “There are large and small supermarket chains that are driving solid growth.”

Similarly, he said bakers should leverage the fact baked goods are the number one driver for trips to the store. Bakers could, for example, encourage retail partners to merchandize items in other parts of the store, like near the meat case for hot dogs and hamburgers, he said.

“I’d like to see bakers shift trade spending to capital expense spending within their retail partners to create integrated store sections that bring in other categories consumers eat with bread and baked goods.”

fresh_bread_bakery_packaged

Strengthening and innovating in the fresh part of store also held promise, he said. Dollar sales and volume sales of fresh bakery were up more than 2% in 2014 across stores, Nielsen Perishables data indicates.

“There has to be greater innovation in the fresh bakery section of stores where consumer perception is that those freshly baked items must be fresher, when in fact many are frozen products that are likely freshly baked in stores.”

Asked if baked goods had potential on e-commerce platforms, Hale said: “The opportunity will come mostly in click and collect models, where shoppers order online and pick up at a store, and not from pure-play models where products are ordered online and delivered to shopper’s homes.”

Your consumer is important

Beyond spaces, Hale said bakers also had to carefully consider consumer groups.

Consumers_women_bread_instore bakery

“Find out where your products sell today – if you have low sales among consumer segments who are driving future population growth, then you need to find a way to connect or your future is in question,”​ he said.

If, for example, a baked good held strong appeal among the older population segment, he said it was important to make the most out of existing sales opportunities. But, he said companies should also look for ways to connect with younger, more diverse population segments.

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