Lack of innovation plus rising prices pose major headwinds for in-store bakeries (ISB), but significant opportunities exist as well.

Those are the key takeaways from a recent survey of 900 in-store bakery shoppers conducted in May, noted Wade Hanson, senior principal, advisory practice, at Technomic, who spoke at the 2023 International Dairy Deli Bakery Association’s show June 4-6 in Anaheim, Calif.

Specifically, Hanson said consumers are tired of the “sea of sameness” and want bakeries to innovate the traditional favorites that they buy, such as cakes with different flavor frostings and other new varieties of popular baked goods.

The survey showed 46% of consumers agree that when they see a new item or flavor, they “have to try it.” That’s especially the case with younger consumers.

“We have had points in time over history where the consumer was looking for absolutely new products — nothing like they’ve seen before,” he explained. “That’s not the place where the consumer is today. The consumer wants to see innovation within traditional favorite categories.”

He pointed out that seven in 100 shoppers never visit the in-store bakery because of the perceived sameness of the product selection.

Additionally, inflation has taken its toll. More than 80% of those surveyed said they’re concerned about in-store bakery prices today.

“What we’ve seen over the last 24 months is, as inflation has risen, as those prices have gone up, the concern has clearly gone up,” Hanson said. “And what’s interesting is the consumer will tell us that they believe price is more of an issue in the ISB than it is elsewhere in the store.”

In fact, he added, consumers surveyed think in-store bakeries are more expensive relative to the other fresh departments along the supermarket perimeter, and some 58% are concerned those high prices will remain in the future.

“That’s something that we have to pay close attention to as we go through the next couple of years,” Mr. Hanson noted. “So a near-term observation of our team is, yes, value matters, and another important point is many consumers fear that grocers may maintain those high prices.”

He said consumers are wary that grocers are going to keep prices high even after inflation comes back down, and they may have to reassess their shopping habits.

“They’re [thinking] this is going to be the new baseline for where ISB prices sit, and that’s concerning to a lot of consumers,” Hanson explained.

Overall, the in-store bakery is very important to where consumers shop, but its importance is waning, Mr. Hanson said.

Technomic’s survey showed 31% of shoppers purchase baked goods from the in-store bakery every time or most of the time they visit the store. That compares to 42% of consumers in 2019.