In-store bakery regional outlook–Boston

Leaders stay in place

Despite the evolution the bakery department has seen in recent years amid changing consumer habits and preferences, breads and cakes remain the anchors for most in-stores, regardless of location. The exception? Breads track much higher in the Northeast than they do nationally, Parker says. “If you took the other three regions and looked at the bread category, the Northeast would be much higher. Bread is more important there than the other regions, and Boston blows it through the roof.”

In the Boston region, roughly 23 percent of average weekly sales come from the bread category, significantly higher than the 18 percent average for the Northeast region, which still trends higher than the national average of 16 percent.

“Breads…are a real workhorse for us,” Deluca says. “In the artisan bread category, there’s obviously been a lot of health-conscious folks out there so multigrain type items are doing well.” She adds that sales are up for smaller portions, particularly for stores near Boston’s inner city. “People are looking for portions that they can use for one meal versus buying loaves of bread for a whole week.”

“We’ve seen the crusty breads category really evolve,” Prehl says. “Coming in a scratch baker, I can’t believe crusty breads have become such a huge item, but it’s a big line for us.”

Photo provided by Supermarket News.

Parker attributes the success of bread to its positioning in most Boston-area in-store bakeries as a low-price leader item. “Stores have the strongest penetration and most frequent mover in bread, so they make sure it is in stock, easy to find and they offer crazy sales on that item,” she says. “That’s a strategy they have employed that others could learn from. A lot of retailers are instead spreading focus in breads across a wide variety. The ‘leader item’ strategy gets those customers who might be looking for something quick for tonight, but they also offer a variety for bread enthusiasts.”

The ever-shrinking cake
The continued dominance of cupcakes has no doubt given the cake category a lift, which accounts for more than 24 percent of weekly bakery sales in the Northeast and 21 percent of weekly bakery sales in Boston (less than the 30 percent national average). But smaller sized cakes also are making inroads with customers from all demographics.

“On the cake side, things have gotten a little smaller,” Deluca says. “And especially with the cupcake craze. Boston is no different from any other area with what people see on Food Network and TLC, now they want to buy or prepare it. We provide a big array of cupcakes. We do custom designed, fun cupcakes, but also more indulgent flavor profiles. With cakes, people are looking for fun designs–it’s not as staunch as it used to be.”

“Smaller cakes and smaller portions in general have been a trend for the past few years,” says David Hay, bakery buyer for BJ’s Wholesale Club, Westborough, Mass., which sees significant business from decorated occasion cakes “It’s not always a full sheet cake, smaller households often look for the quarter sheet cakes. They don’t want to waste anything.”

Customers are requesting more nuanced colors than ever before in decorated cakes.

Hay notes that customers are more interested in customized creations than ever before. “Just looking at the color palette that’s available with our occasion cakes, customers are requesting amazing colors,” he adds. “We used to just offer yellow, orange and blue. Now we’re taking it to violet and asparagus green–and customizing that at the club level. We’re also playing around with flavors. Red velvet has stayed strong, but we’re also bringing in flavors like coconut and tres leches.”

Prehl echoes the sentiment that customers are requesting more vibrant colors and flavored icings, from “plum” purple to “tranquil” turquoise. “They’re more informed. I think a lot of that is from TV shows. It’s interesting to see the effects of that.”

The year of…?
Whether it’s the year of the donut, black and white cookies, bittersweet chocolate or the locavore movement remains to be seen. But like everywhere else, retailers in the Northeast are faced with a customer who thinks more globally than ever before.

“One big quandary the Northeast has that we might see in future is figuring out if bakery is truly regional anymore,” Parker says. “We are a global nation now. Everybody’s looking for next big thing outside their region’s borders. And how can they bring people that new experience? I really believe that what is so inherently regional about the bakery is retailer-driven. If you only give people things they think they want that’s all they are going to buy. You don’t know if they’re open to new flavors if you don’t offer them those flavors.”

She notes the tendency of retailers to maintain the status quo simply because it’s what they’ve always done, using the example of muffins, which have a reputation for being a staple in the Northeast. “We consistently see retailers in the Northeast over-SKU in muffins,” Parker says. “They’re not a main driver on a national scale; it’s not necessary to have a 10 percent share of muffins. When we ask why they have it, they tell us, ‘It’s just what we’ve always done.’”

But the winds of change are blowing, as in-stores are forced to be more nimble than ever in the face of a shrinking market for customers’ precious dollars. Beyond independent bakeries and bakery cafés, Starbucks and McDonald’s are also encroaching on their territory with a greater focus on breakfast offerings.

“The in-store bakery is big here in the Northeast, but in the Greater Boston area, you also have the corner bakeries you need to contend with,” Deluca says. “Not only that, but people are looking to save that extra dollar whether they buy coffee in morning or a Danish or a muffin. Today, McDonald’s and everybody else is vying for your business.”