While college basketball fans wait to see how their March Madness brackets pan out, Nielsen decided to create a tournament of its own. The research firm’s annual Total Store Bracket pitted different sections of the supermarket against one another to understand what area of the store is making the most sustainable gains.  

From grocery and frozen to produce and meat, Nielsen ranked 16 standard departments based on 2018 volume sales to create the bracket. Units advanced based on year-over-year volume growth from the past 52 weeks ended Feb. 23, 2019, and prior four periods of 52-week data.

When the departments were narrowed down to the top four, deli, meat, in-store bakery and produce made the cut. In the final showdown, deli beat out bakery due to its $36.6 billion in sales and ability to quickly adapt to trends and offer convenient meal options.

“Arguably, more so than any department or area of the store, the deli department consistently innovates to keep the product offerings new and exciting,” said Matt Lally, associate client director of Nielsen's Fresh Growth + Strategy team. “While the bakery department is generally good about supplying hot new flavors like red velvet, the product concept is still generally the same. Meanwhile, the deli department aligns itself more closely with broader trends and offers brand new products to meet that demand whether it’s introducing sushi or freshly made guacamole.”

Although it couldn’t make it to the top spot, the in-store bakery is thriving as it reached $13.2 billion in sales and developed items to meet consumers’ evolving demands for convenience and nutrition. Nielsen noted that the department has successfully capitalized on the demand for smaller products and that mini pies have helped spark sales.

“Right now, a mantra for the department can and should be ‘smaller is better,’” Mr. Lally said. “There are still occasions and need for large platters or giant cakes, but the growth is coming from smaller-sized products or portions.”

Mr. Lally noted that mini versions of products are just one way bakeries can deliver smaller portion sizes. Reducing the number of items in a package is another option.  He said that cookies have experienced growth within this department because retailers now offer containers with just enough cookies for a small household.

Although it can vary from store to store, visual appeal is another important component of the in-store bakery’s success.

“A large portion of sales are impulse buys, so keeping the merchandising clean draws the eyes,” Mr. Lally said. “Then the products themselves need visual appeal — from the product to the package.”

Looking to next year, Mr. Lally offered in-store bakeries a few tips that could help increase purchases. He said departments should focus on keeping their product mix in tune with upcoming holidays and events.

“Aligning assortment and availability with seasonal demand is a huge opportunity,” Mr. Lally said. “For example, during the course of a year, cakes represent 30% of bakery dollars and 31% of items sold. Pies represent 6% of dollars and 7% of items. However, during Thanksgiving week pies represent 25% of dollars but still just 9% of items.  Meanwhile cake’s share drops down to 21% of dollars but still accounts for 29% of items.”

To increase sales, in-store bakeries should shift their offerings to match demand during popular holidays when certain products seem to spike while others decline.

In addition, bakeries should lean into seasonal flavors much like they currently do with pumpkin. When produce such as cherries or apples are in season, products should capitalize on that association.