10 Reasons Private Label Bread Drives Profit
Atkins, paleo, keto — although low-carb diets have been on the rise for a couple decades now, they haven’t done much to separate people from their love of bread and baked goods. According to the American Bakers Association, the total sales for bread and baked products reached $59 billion in 2018. In-store bakery goods accounted for $13.8 billion, with an overarching preference for desserts and other indulgent items.
In short, shoppers love bread. One way your grocery store can tap into people’s love of baked goods is to start offering private label products, such as sliced bread, hamburger and hotdog rolls and English muffins. There are multiple benefits to providing private label bakery products to your shoppers, including increased sales, heightened customer loyalty and enhanced grocery store profitability.
What Is Private Label Bread?
Private label bread is sold under your store’s label or brand name but is produced by a third-party company. Private labeling allows you to offer own-brand products without requiring you to develop the recipes or methods of producing those goods. The recipes for private label bakery products are created and owned by the company manufacturing the bread.
Private label products have been popular since the Great Recession when shoppers looked for more affordable alternatives to their favorite brand-name commodities. The success of specialty grocery stores has also led to increased consumer interest in private label groceries. Retail stores have shown shoppers that store brand products can have the same high quality and delicious taste as the popular name-brand goods.
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Benefits of Private Label Bread
If your store hasn’t yet begun offering customers private label bakery products, now is the time to do so. Adding your own line of bread and baked goods can increase profits and customer retention. These advantages can make it easier to expand your range of selections and invest time and resources into improving your business overall. Here are some key benefits of private label bread:
1. Gets People in the Door
Think of comforting scents and sights — what do you imagine? The smell and appearance of fresh-baked bread probably sit near the top of the list. When customers walk into a grocery store and see private label bread products stacked up or arranged neatly in the bakery section, they are likely to feel welcome and comfortable in the store.
Baked goods do more than put people at ease. They also encourage them to come back to shop again and again. The bakery section is one of the main reasons why people go into grocery stores, and the average consumer visits the shop at least once a week for fresh-baked goods. Offering private label products gives people a reason to come to your store for subsequent visits. As they purchase more goods, you earn more revenue and increase your bottom line.
2. Attracts More Customers
Private label bakery products encourage shoppers to buy from your store more frequently, and they can also attract new customers. When people find out you’ve begun to offer private label goods — or you’ve expanded your in-store bakery options — they might be encouraged to come and check out what’s available.
People are naturally curious and want to try out what’s new and exciting. If you don’t yet sell a certain product, such as English Muffins or all-natural bread, introducing a private label option can make people step foot into your store. Once you draw them in with the idea of something innovative and never-before-seen, your bread’s quality and taste will get them to stay. You can appeal to various audiences by offering a diverse range of selections, including specialty goods.
3. Boosts Your Store’s Image
Private label products do not have to carry your store’s name on them. You can create a unique name for your bread that conjures up images of wholesomeness and health. Choosing the right branding for your bread products helps people remember your business, making them more likely to select you as the first choice for their grocery-related needs. Name, logo, product packaging and other components all make a tangible difference when attracting and retaining customers.
Offering private label goods can also improve your store’s overall image. If the sliced bread, bagels and specialty rolls you sell are well-made, people will associate your store with high-quality products. These individuals will go to you for delicious baked goods — rather than a competitor — because they’ll know and trust your dedication to selling excellent bread. Your brand’s image and reputation will get an overall boost.
4. Encourages Basket Shopping
Although many shoppers claim to go to the store for “just one thing,” most don’t end up leaving with only a single item. Often, they get to the store and realize they need related products. Or, they believe a few additional goods would pair nicely with the main thing they’re buying.
If a person visits your grocery store for a loaf of fresh, sliced bread, they’ll likely “basket shop,” or purchase products across a range of categories. Along with that bread, they might purchase sliced lunch meat and cheese from the deli or mayonnaise and ketchup from the condiment aisle. If they’re buying bagels, they might also stock up on cream cheese and lox. People getting English muffins might decide to purchase shredded mozzarella cheese and tomato sauce to make mini pizzas.
5. Increases Revenue
Compared to making bakery products in-store or developing recipes and producing baked goods off-site, private labeling tends to be more cost-effective. Your store doesn’t have to invest in its own bread-making equipment or factory, nor do you need to worry about keeping a facility fully staffed and operational. Since you’re paying less for private label bread than you would for other options, you will likely see an increase in revenue and overall profits.
Although your store isn’t producing the product in-store or in a facility you own, it retains control over the total cost and profit potential of the baked goods it offers. You can work with the baking company to create a recipe that meets your store’s budget needs.
That might mean selling a particular type of bread or choosing certain ingredients or formulations over other options. Analyzing what types of bread your consumers enjoy and purchase most often can help you decide what varieties to include within your own brand. Your store also retains control over the bread’s price. You can sell it for as much or as little as you want, based on customer demand.
6. Can Be Coupled With In-Store Loyalty Programs
Store loyalty programs allow shoppers to access coupons and discounts in exchange for having their purchases tracked. If your store has a loyalty program, you can use it to your advantage regarding private label bread. Analyzing the data provided by the program, you can see what products sell and are in high demand — such as English muffins or organic loaves. You can then reach out to a private label manufacturing company and ask it to produce these in-demand types of bread.
Since the private label company most likely has recipes for the desired bread — or can quickly develop a recipe — you can get the latest product on your store’s shelves as soon as possible. The quicker you begin selling your bread, the quicker you’ll start seeing the results of your business decisions.
Loyalty programs also let you connect with customers and direct them to your private label products. If a consumer regularly purchases name-brand bread at your store, you can set up the register to provide a coupon for your private label equivalent at check-out. You can program the register to print coupons when a cashier scans the barcode of a competitor’s product or a loyalty card.
7. Lets You Offer What People Want
Customers love it when stores listen and respond to their requests. Working with a private label manufacturer enables you to give people what they want from an in-store or commercial bakery. For example, if people are asking for more whole-grain alternatives, you can consult the company that produces bread for your store. More likely than not, the bakery will have several recipes for whole-wheat or whole-grain products at the ready. You can swiftly introduce the goods to your store shelves.
Giving people want they want helps them get the food they need for optimal health. It also makes them feel cared for, which can increase the feelings of loyalty they have toward your store. Their brand loyalty might prompt them to recommend you to friends and relatives, which will serve as excellent word-of-mouth advertising.
8. Comes With Built-In Advertising
Some would argue that big-name brands have one distinct advantage over private labeling — they often have much bigger budgets for marketing and advertising. While it’s true a well-known bread company will have massive amounts of advertising dollars to spend, it’s also accurate that the need to spend on advertising will translate to a higher price point for the consumer.
Your store might not have the advertising dollars to purchase commercial air time during major TV events or to invest in a nationwide print advertising campaign. But in many cases, you won’t need to, as marketing and advertising for private label products comes built-in with your store. You can highlight your goods right when people step in the door. The in-store bakery section is often the first section shoppers see. Putting the bread front and center is its own form of advertising.
Another form of built-in advertising that’s connected to private labeling is the often much lower price point for the consumer. When people realize they can have fresh-baked goods for a lot less than what they were paying for a brand name or specialty bakery bread, they’re likely to get on board.
9. Keeps Your Store on Top of Trends
Although bread is one of the most important baked goods categories, it also struggles to see growth. But there are usually outliers in the bread category — items that become very popular with customers and sell well. In recent years, premium breads and specialty rolls have proven to be well-loved, with each category seeing gains in 2018.
When you offer private label products, your store can adapt to trends quickly and easily. If English muffin sales are up, you can order more. If people demand specialty, hearty loaves, you can tap your manufacturer to start producing those.
Since you don’t have to invest time and money in development, research and manufacturing, your store can keep up with rapidly changing trends in the bakery section. Your consumers will also appreciate your ability to follow the trends and stock goods popular with the general public. If another retailer is sold out, shoppers can come to you for their baked goods instead.
10. Creates Opportunities for Greater Profits
Offering your customers private label baker products can be just the beginning. Once people try your store’s bakery items and realize that they are high-quality products, they might be encouraged to purchase other private-label products offered by your company. A shopper who purchased a loaf of sandwich bread might return on their next visit and buy English muffins, for instance. Or, they might branch out and try private label products in other categories. They might also tell their relatives and friends so that more people are encouraged to try your store’s private label breads.
The more people buy for your store’s private label, the greater your revenue and in turn, the greater your profits.
Gold Medal Bakery’s Private Label Breads Can Help Your Grocery Store Maximize Profits
Supermarkets and grocery chains that offer private label products have seen an uptick in sales in recent years. Some retail stores see sales increase as much as $20 billion from private label products, especially when private label brands account for a large percentage of inventory. Additionally, retail stores that choose to offer private brands can see increases in demand and sales, leading to more store openings and expansion nationwide.
If your store is looking to boost its sales, maximize its profits and expand across the U.S., private label bakery products can be a driving factor. Gold Medal Bakery is a commercial bread manufacturer that offers private labeling services to grocery stores of all sizes. We can work with you to develop bakery products that meet demand and attract new customers to your store. Our product line includes sliced bread, rolls, English muffins and specialty bread products such as bagels.
Whether you just need a few products to enhance your in-store bakery section or are looking for more in-depth guidance and support to increase your commercial bakery sales, Gold Medal Bakery is here for you. Contact us today to learn more about partnering with us.
