Why In-Store Bakeries Need Artistry, Not Just Thaw-and-Sell, to Win Shoppers

The Bakery Dilemma: Small Sales Share, Big Strategic Weight

At just 3% of total store sales, the in-store bakery is a disproportionate battleground for grocery retailers. It is labor-intensive, prone to waste, and faces rising ingredient and labor costs, according to Russell Zwanka, professor of food marketing at Western Michigan University. Yet despite unit sales dipping 1.3% year over year in June, per Circana data, the department remains a powerful loyalty builder when executed with care.

“Anyone can thaw and sell,” Zwanka said, “but it takes artistry and care to operate a great bakery.” Shoppers typically buy on impulse or for special occasions, making eye appeal and a sense of indulgence essential. But the challenge, as Mintel notes, is to blend that decadence with growing demand for health and wellness. The path forward, Zwanka argues, is to avoid shrinking to a “shrink control mode” of undifferentiated, price-driven products, and instead pair signature items with limited-time offers that keep the assortment lively and the store reputation strong.

The Artisanal Edge: Why Variety and Craftsmanship Outweigh Cost-Cutting

The margin trap: why cost-cutting alone backfires

Faced with rising ingredient and labor costs, many grocers instinctively cut SKUs to control waste and shrink. But Zwanka warns that this “shrink control mode” produces a sea of commodity baked goods—boring, non-differentiated selections where price becomes the sole differentiator. Circana’s June unit-sales decline suggests the sector is already struggling for volume; narrowing the assortment risks accelerating that slide as shoppers turn to bakeries that offer genuine variety.

Signature plus limited-time: a model for sustainable excitement

Zwanka’s prescription is to pair permanent signature items with rotating limited-time-only products in each sub-category. This approach drives incremental sales without ballooning permanent SKU counts, keeps displays fresh for impulse buyers, and lets stores test new recipes without full commitment. The tactic also creates a reason for shoppers to visit more frequently, turning the bakery into a discovery destination rather than a predictable commodity stop.

Indulgence meets wellness: a delicate balance

The article confronts a core tension: shoppers seek both decadence and health. Zwanka suggests the solution lies in high-quality ingredients that feel indulgent but carry cleaner labels. He points to all-natural, organic cherry pies made with locally grown cherries as one example. This kind of offering can broaden the bakery’s appeal to health-conscious consumers without sacrificing the “feel-good” decadence that drives the department’s emotional pull.

For Retailers: Turning the Bakery from Cost Center to Destination

• Audit your current bakery assortment for “thaw-and-sell” sameness. Identify one or two high-margin, made-in-store signature items—such as a locally sourced fruit pie or artisanal bread—that can become a trip driver.
• Implement a rotating limited-time-offer calendar, tying at least one item to a seasonal or local ingredient. This creates urgency and gives customers a reason to return specifically for the bakery.
• Address health concerns without stripping out indulgence: promote the natural, organic, or simple-ingredient credentials of select products, and train staff to tell that story at the counter.
• Re-examine shrink-control metrics to avoid penalizing the variety that builds reputation. Measure basket attachment and loyalty-customer visits alongside waste, so that the bakery is judged on its total store contribution, not just its siloed P&L.