Lidl is making a major play for in-store bakery and it’s not afraid to shout about it.
The discounter – which is currently the sixth largest grocer in the UK by market share [Statista] – recently overtook Tesco to secure the biggest slice of in-store bakery (ISB). Data from Kantar showed that Lidl, which was crowned Bakery Retailer of the Year at the 2023 Baking Industry Awards, had pipped the UK’s largest supermarket with 18.2% of the ISB market compared to Tesco’s 18%.
Speaking at the British Society of Baking conference earlier this year, Holly Bleach, head of buying at Lidl, described bakery as “critical” to Lidl as it’s one of the categories that drives overall customer satisfaction.
“We’re set up to be really successful in bakery in the UK due to the prominence of our bakeries in store. More often than not, they’re right by the front door so every customer that walks in has to pass the bakery and not many can resist stopping and obviously picking up an item,” she said.
Lidl set to make its bakery even more irresistible with a host of activity unveiled in recent months.
“The Special Guests act as an amazing playground to test new innovations”
“There’s been a lot of activity in our bakeries from about September onwards last year – we’ve launched new ranges, done lots of promotional activity, new merchandising concepts in store, and we’ve had some really punchy marketing and promotional activity, and a big push on availability.”
The core Lidl range consists of 40 lines with a typical store ranging around 35 to 37 of these, based on regional preferences. Core lines include the Ultimate Chocolate Brownie, All Butter Croissant, Pastel del Nata, Belgian Bun, and Pink Iced Ring Doughnut.
Guests of honour
To add excitement and drive impulse purchases, the retailer introduced Special Guests to its line-up with two new products added every fortnight and staying on shelves for four weeks.
“The Special Guests act as an amazing playground to test new innovations and just witness our customers’ reactions to new products that we’ve done,” Bleach explained, admitting that not all of them work but the limited-edition format allows the retailer to take a risk on things that might not be considered otherwise. Sweet items tend to be the most successful, she noted as they are more likely to be an impulse purchase.
The Cheese Pretzel Roll is an exception and has been a Special Guest three times. The Sticky Cinnamon Bun is another success story and has been made be a permanent addition to the Lidl bakery line-up.
“Being a discounter doesn’t mean we compromise on quality – it’s paramount to us”
Doughnuts are another product Lidl has been experimenting with. Alongside the roll out of Special Guests bays, the discounter introduced Delicious Doughnuts bays – brightly coloured sections of the ISB fixture highlighting the limited-edition doughnuts of the month that were available.
“Doughnuts are such versatile products and so we’ve had a really good time coming up with lots of different types of doughnuts to run – we’ve done everything from a Boston cream doughnut to square-shaped ones,” Bleach explained, adding that the most successful ones are cronuts. “We launched a sugar cronut, which was immensely successful. So much so that we developed and brought to market a chocolate cronut which actually outsold the sugared one.”
Ticking all the boxes with innovation
More NPD means more opportunities for suppliers to get their products on Lidl’s shelves. Notably, the discounter doesn’t have product developers, so everything is handled by Bleach and her team. So, what are they looking for when it comes to new products?
For starters, “keep innovation relevant”, she advised. Variations on brownies have performed exceptionally well as have seasonal muffins, for example, with the Easter and Halloween variants highlights among top performers.
New products must stand out visually from the rest of the Lidl range to allow staff on the tills to identify it quickly and correctly. “Get to know our range and make sure that what you are developing stands out from anything else we’ve got in the range and look sufficiently different,” she said.
Any item which requires baking off in store must also work with the Lidl bake programmes. Every oven in a Lidl store across Europe has the same five bake programmes loaded onto them, meaning all products must be compliant with these.
In line with this, Bleach added that “efficiency is in our DNA” so the discounter tends to avoid products which require additional handling or extra finishing. Additionally, Lidl asks that suppliers provide the baked goods in relevant denominations. For example, if you can fit 10 croissants on an oven tray then they should be provided in a denomination of 10.
“What that means is when your busy bakery operative in store is loading up the tray to go into the oven, they’ll never have to stop what they’re doing because there’s not quite enough left in the bag,” Bleach explained. “Things like that might seem small but actually make a huge difference to the efficiency in store and getting products out on the shelf.”
Another thing Bleach was firm on was the quality expectations. She assured the audience that: “Being a discounter doesn’t mean we compromise on quality – it’s paramount to us. We constantly ensure our products meet or exceed both customer expectations and market standards. If a product doesn’t, then we won’t consider it.”
A loyal fanbase
With product quality and innovation where it needs to be, Lidl drove more customers to its bakery through its marketing and loyalty app.
“One of the biggest tools that we’ve used in our armoury over the course of the last year has actually been the use of our loyalty app Lidl plus,” the buyer explained.
App users get a free doughnut on their birthday and also access to ‘bakery happy hour’, which means they receive a coupon for 30% off all baked goods after 7pm which is “great for increasing sales, but also for reducing down surplus at the end of day”.
It has also run the ‘spin of surprises’ promotion twice. This promotion encouraged around three quarters of customers to try a new bakery item – it has a “huge halo effect across the whole bakery as well”.
With great strides made, no doubt other retailers will be paying close attention to the discounter’s next moves and implementing their own strategies for in-store bakery.
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