What's Next for In-Store Bakeries

After several years of growth, the in-store bakery (ISB) channel experienced significant losses during the pandemic. While center store packaged baked goods sales boomed as customers looked to stock up on products with a longer shelf life, ISBs struggled with consumer uncertainty around freshly prepared foods. Rising competition from other retail options, reduced grocery visits, and safety concerns all dwindled category sales.

Last year’s sales declines do not indicate a lack of consumer interest. ISBs rebounded from early stay-at-home orders with consumers increasing consumption by the end of 2020. The ISB channel will need to rise to the challenges of the new consumer market by addressing new dietary and taste preferences, and safety concerns.

Bread products have previously led over sweet goods in the North American in-store bakery category. However, in 2020 there has been a reversal of that trend with cakes, pastries, and other sweets taking the lead over bread products in this channel. Consumer interest in sweet goods over the pandemic should now be carefully considered in the selection of new product offerings.

Additionally, people have been baking more bread and sweets at home during the pandemic. Consumers have become more educated about the baking process and the ingredients needed to make food simpler, healthier, and ‘cleaner’.  Transparency in delivering better-for-you products will be important in satisfying customer needs. 

With the increased focus on safety concerns, ISBs have adjusted in-store bakery product lines, packaging, transparent safety measures, and merchandising strategies to accommodate COVID-19 restrictions and changes in shopper habits and safety concerns. Accommodations that were made as a response to the pandemic will continue to be an expectation for years to come.