SCOTTSDALE, ARIZ. — As a category, bakery is huge in terms of potential to drive sales at the retail level, and not just by department but also across the store. This was the message from Todd Hale, principal, Todd Hale Associates, LLC, when he gave his trend report to attendees of the American Bakers Association annual convention, held April 15-17 in Scottsdale.
At the convention, Miles Jones, co-chairman and executive vice-president, Dawn Foods, Jackson, Mich., noted to attendees that bakery is a $50 billion industry when combining all A.B.A. member categories into one. To that, Mr. Hale added, “When you look at complementary categories, excluding beverages, I added up about $85 billion in sales from other categories that are consumed with bread and bread products.”
Mr. Hale described A.B.A. member categories as “trip drivers,” because 100% of households purchase in these categories at least once a year, providing strong shopper traction with return trips averaging about 40 times per year.
“This helps bakers connect with very diverse shoppers, whether you’re talking about generations, multi-cultural or households with spending power across income,” Mr. Hale said.
Bakery products also are meeting demands across multiple eating occasions and becoming part of meal consumption patterns across a variety of dayparts and days of the week. Interest in categories crossing over health and wellness and indulgent is contributing to that, despite the fact that overall bakery growth might be slower than what the economy would let on.
Based on his most recent research, Mr. Hale had seven predictions for A.B.A. members to focus on for leveraging growth.
1. The stars are aligned for growth
“Yes, there are headwinds out there, but tailwinds are out there that should allow us to drive that growth,” he said. “But you can’t watch on the sidelines. You have to invest in growth.”
2. Innovation from clean label, ethnic, comfort and convenience
“It’s not just about healthy,” Mr. Hale said. “Indulgence matters. How do you balance your product offerings?”
3. Basket building through personalized marketing
Mr. Hale noted that retailers’ traditional paper-based marketing is hard to drive sales through the store. “Rely on these wonderful digital capabilities to get people to get someone to shop the bread aisle and also pick up some lunchmeat and cheese,” he said. “Promote that and make it part of the conversation.”
4. Fresh ideas for center store
Mr. Hale said center store is staling. “It’s been the same since early cave man,” he joked. “How can we make it different? How can we take advantage of the fact that people shop both center store and the perimeter and help them take better advantage of both?”
5. Department trip magnets
“Specific departments are the primary reason why shoppers make trips to the store. Your category may play a big role in why people come to stores,” Mr. Hale noted. “How can you can you take advantage of those trip magnets and make sure you’re getting the proper level of promotional support you deserve?”
6. Private brands resurgence
“If you’re a private label manufacturer, there are big opportunities to ride this wave,” he advised. The brands still hold the majority share in most categories and departments, but Mr. Hale cautioned that it’s all relative, and many categories are seeing a rise in private label popularity.
7. Strange bedfellows
Mr. Hale called attention to some unlikely partnerships striking up across the retail landscape, including Albertson’s acquiring Rite-Aid, Walmart buying into health care-related companies and Campbell Soup Co.’s recent acquisition of Snyder’s-Lance. “Campbell invested in a part of the store that’s growing,” he observed. “I urge you to think about if there’s an opportunity to invest your dollars in other businesses that can help you drive stronger growth or perhaps build out your e-commerce capabilities. Think about investing dollars to drive growth in a lot of different ways.”