From Competition to Collaboration

With consumers thinking about their shopping carts more holistically rather than focusing on select products or foods, category management alone is no longer getting the job done. As an in-store bakery manager, you can scrutinize your category around the clock, but if you’re not creatively collaborating with other departments, you’re missing out.

That may be why, according to a recent Food Marketing Institute survey of grocery retailers and food manufacturers, 100 percent of respondents agree the industry is in need of change in the way of category management.

“Retailers have been merchandising their stores one category at a time for the past 25 years,” says Jean-Michel Fally, a principal at Deloitte, which co-authored the study. “Category management brought major improvements in the knowledge retailers have of specific categories, products and trends. It also helped retailers better manage category financial growth and profitability. However, consumers now shop less for distinct products (i.e., ingredients) and are looking for easy solutions to satisfy their needs.”

For in-store buyers, the competitive business landscape means coming to a unanimous opinion among department decision-makers is a must. Grocery stores and in-store bakeries are being challenged by channel migrations, including mass retailers offering substantial food sections and surging online grocery sales and pantry subscriptions. A survey of consumers conducted by Nielsenfound one-quarter of respondents had purchased groceries online, and 55 percent said they were willing to do so in the future. 

Also at play: Consumers today are both incredibly time-starved and lifestyle driven. The meal-kit delivery market didn’t exist a decade ago; now startups like Blue ApronPlated and Hello Fresh, which send customers portioned ingredients for specific recipes, are competing for an industry that could reach $5 billion by 2025. Some of those dollars used to be spent at the grocery store. A handful of these mail-order meal kits also cater to specific food lifestyles, including paleo and vegan. And while specialized diets may have meant no choice but home cooking when category management first came into fashion, these days, even fast-casual eateries are answering the consumer call for options that are gluten-free, locally grown or GMO-free.

Put Your Heads Together

Traditional category management can’t keep up with shifting expectations for what Fally calls meal “solutions.” And while the surveyed manufacturers and grocery execs don’t think category management should disappear completely, they do call for a massive injection of innovative thinking and interdepartmental collaboration. “It’s a different way of seeing the experience, a different lens through which to think about merchandising, promotions—everything,” says Fally. 

Take, for instance, a time-strapped parent’s experience of shopping for school lunches on a rushed Sunday night. Category management would make him trek nearly every aisle in the store for sandwich fixings and sides—and once he’s in a center aisle, grabbing a bagged bread loaf becomes more convenient than swinging by the in-store bakery for a fresh one. But why not collaborate with deli, produce and center store to create a meal station dedicated to school lunches—stocked with fresh bread, deli meat and cheese, carrot sticks and apples or even jars of peanut butter and jelly? Fally says this approach may require more work on the retailer’s part, but all departments would reap the tremendous benefit of a satisfied consumer.

That satisfaction can be especially true for millennial shoppers, says Kit Yarrow, Ph.D., a consumer psychologist and author of “Decoding The New Consumer Mind.” “Our brains are shaped by how we use them,” she says, explaining that unlike older generations, millennials and younger shoppers didn’t go through arduous memorization tasks in school, making them less apt to remember shopping list items or recipe ingredients. Using focus groups, Yarrow surveyed the pain points of today’s grocery store visitors. “Shoppers say they feel anxious about forgetting components of a meal when they go shopping. They always have said this, but the angst is louder and more prevalent than ever,” she says. Against that thrum of heightened anxiety, coordinated displays offer “fewer hassles and more guarantees and assurances,” Yarrow says. 

Design the Perfect Meal

Meal displays don’t only assuage consumer fears over forgetting an item—they may be an effective way to upsell bakery items. “Shoppers are heavily influenced by environmental cues,” Yarrow explains. Include a fresh-baked pie in a dinner display, for instance, and you may entice a shopper who wouldn’t have stopped by the in-store bakery at all, simply because she sees it presented as part of the meal. Likewise, if shoppers are following an ingredient list that doesn’t lead them to the bakery, crusty dinner rolls displayed alongside stew fixings, for example, can encourage more bread sales. 

Of course, those coordinated displays also require active dialogue and brainstorming between departments. And that’s something that the current category management system doesn’t foster to its fullest. “What it’s done is create silos between categories, so each manager looks in isolation at their own metrics and profit and loss,” says Fally. 

Indeed, a 2015 Dawn Foods survey of in-store bakery managers found that most felt internal pressure to perform as well as their counterparts in deli and other perishable departments. Turning that pressure from competition to collaboration, however, is one of the first necessary steps to creating a truly shopper-centric experience—and seeing bakery sales jump.