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Browsing for bread – the fast rising future of online bakery sales
31 May 2016
Bread may not be the first thing that springs to mind when thinking about online retail. However, sales of bakery and particularly fresh bread products are among the fastest growing areas for online grocery retailers. The rise of online bakery sales has profound implications for retailers, producers, and consumers alike, says the Rabobank ‘Online Bakery: Browsing for Bread’ report.“Whether producing branded or private label, fresh, frozen, or long-life bakery products sooner or later producers will have to learn the ropes of selling online,” explained Cyrille Filott, Rabobank’s Global Strategist Consumer Goods. “In essence this means that producers will have to rethink their assortments, marketing and supply chain strategies. Closer collaboration with retailers is likely to be key in this regard, in order to gain and share knowledge. And to be able to deliver a fresher product to the consumer."
The report notes that searchability and the right product assortment are key to success online. Producers will need to consider the visibility of their products online, particularly on retailer’s websites. Generating online sales also requires a more dynamic way of marketing bakery products, to stand out to consumers.
As online grocery retailers gradually reach critical mass, they will increasingly invest in more efficient supply chains, in order to be able to meet consumer demand for fresher and better-quality products. This will provide opportunities for bakery providers.
To date, the rise of online bread shopping has revealed some interesting differences across cultures. The UK and France, for example, have similar levels of online grocey shopping, with penetration rates nearing 5%. However, British consumers tend to buy more limited and long-life bread when compared to the French, who buy a greater share of their bakery products from artisanal bakeries.
As a result, British online grocery groups tend to offer much larger bakery ranges than their French counterparts – an average assortment of 850 items compared to 150. In a relatively underdeveloped online grocery market like the Netherlands, the average offer amounts to 275 items.
Nevertheless, while differences in shopping habits will remain between countries, the overall trend is clear; online shopping is gaining ground rapidly. Rabobank anticipates online grocery shopping to account for between 20-25% of all grocery sales in Western Europe by 2030.
There are already strong online sales trends for long-life and morning goods like bagels and pastries. Fresh products have had a slower start, but are beginning to catch up.
The report recommends that bakery producers act now, in response to these trends. A sit-and-wait approach may eventually result in loss of market share and a hard-to-bridge gap with competitors that do embrace digital channels.