Consumers enjoy treating themselves with small indulgences from the retail bakery, despite an increased focus on health and wellness and despite rising inflation.
That’s one of the key messages from the opening session at IDDBA 2023, the annual exhibition of International Dairy Deli Bakery Association, taking place this week in Anaheim, Calif.
In fact, consumers increasingly say it is important to reward themselves from time to time, and they are often choosing to do it with donuts, cookies, and other sweet bakery treats. More than three-fourths of consumers — 78% — in a recent IDDBA survey said they see their physical and emotional health as being interwoven, said Heather Prach, VP of education at IDDBA.
“Consumers are looking to indulge occasionally,” she said, noting that using cleaner ingredients in baked goods in one way to satisfy consumer interest in health and wellness while at the same time meeting demands for indulgence.
Offering smaller portions of indulgent treats is another way to provide opportunities for consumers to reward themselves.
Other key trends identified by Prach and her co-presenter, Whitney Atkins, VP of Marketing at IDDBA, included:
Convenience — 50% of consumers said they mix scratch cooking with fully or partially prepared foods when cooking at home, which represents a strong opportunity for in-store deli prepared foods.
“Home-cooking burnout helps our department,” said Prach.
However, at the same time, retail delis are also competing with restaurants and c-stores when it comes to offering prepared foods. Supermarkets need to focus on strong execution and a mix of made-to-order service and grab-and-go options in order to compete, she said. Grab-and-go prepared foods in particular are continuing to gain traction, a fact reflected in many of the products on display in the exhibit hall.
Sustainability — The increasing interest in sustainability, especially among younger consumers, is another key trend in the deli, bakery, and dairy sections. IDDBA research found that 60% of consumers want retailers to commit to limiting food waste, and 59% said they are concerned about the humane treatment of animals.
“Make sure you have these callouts on your packaging,” said Prach.
Concern for the environment, animal welfare and personal health also dovetail with the increasing interest in plant-based products. Most consumers — 57% — said they purchase plant-based dairy alternatives, including 13% who do so all the time.
Value — Amid the pressures of rising inflation, consumers are seeking to economize throughout the store, and the deli/dairy/bakery area is no exception.
Almost all consumers — 93% — said they are making some changes to save money when buying groceries, according to IDDBA. Strategies include seeking private label alternatives and buying different-sized packaging. About a third of consumers (34%) are buying smaller packages to save money, while slightly more consumers (38%) said they are buying larger packages to save money on a “per-ounce” basis.
“The good news is, we are seeing high engagement” in the deli area, said Prach, noting that consumers report making about 52 trips per year to the department. “Customers are making more trips, but with smaller baskets,” she said.
Technology — Consumers have become much more comfortable with in-store technology such as self-checkout, but much of the action in the tech space is happening online. About 64% of consumers report ordering groceries online, according to IDDBA, but there’s still a significant opportunity for the deli/prepared foods area to gain sales in that area, said Atkins.
Retailers and their suppliers need to “leverage the online real estate” that’s become available, she said, citing opportunities for content online such as promotions, brand story information and recipes, for example.
Retailers and suppliers also need to be increasingly aware of how consumers are using social media platforms for product discovery and recipe information, said Prach. This is especially true for younger consumers, who are using platforms such as TikTok, YouTube and Instagram for meal-prep ideas.
Robotics and automation may also be making some inroads in the deli and bakery areas, with products on display at the show such as robotic coffee makers, bread baking systems and cake decorating robots.
The power of bakery
Rick Stein, VP of fresh foods at FMI (The Food Industry Association), provided some additional information from FMI’s “Power of Bakery” report. Among the tips he offered:
- Whole grains are the top ingredient callout consumers are seeking in the bakery department, cited by 31% of consumers
- 81% of consumers would like to see commercial bread offerings merchandised next to the in-store bakery to make shopping more convenient
- Consumers are concerned about sustainability when it comes to bakery packaging, but they also want the packaging to be functional to protect the freshness and integrity of the products. In addition, 93% of consumers said they need to have a clear view of the product, indicating that retailers need to be careful not to obscure the vision of the shopper with ill-placed labels
- 42% of consumers are motivated to buy bakery items on impulse, indicating the need for eye-catching displays in the department
- Freshness is paramount when seeking to motivate consumers to buy in-store bakery items, Stein said, noting that while some consumers will seek out discounted “day-old” products in the bakery, the store’s primary focus should be on freshly made goods