Surge in like-for-like sales and brand recognition
The well-known bakery chain Greggs has recently experienced a strong growth in like-for-like sales, which it attributes to its increased brand recognition and a return to normal pricing after inflation. The company’s like-for-like sales rose by 13.7% in 2023 compared to the previous year. Over the course of the year, the influence of pricing inflation on Greggs’ sales growth diminished. As a result, customers flocked back to their beloved bakery, indulging in their favourite pastries and sandwiches at more affordable prices. This return to stable pricing, along with Greggs’ continuing efforts to innovate and adapt to consumer demands, has helped solidify the brand’s position in a competitive market.
Continued growth in Q4 2023 and focus on market adaptation
During the last quarter of 2023, the company continued to see growth in the number of transactions and a reduced impact from price inflation, with like-for-like sales up by 9.4% compared to the same period in 2022. CEO Roisin Currie stated that the solid like-for-like sales performance demonstrates the widespread appeal of the Greggs brand. This growth can be attributed to the company’s relentless focus on improving product quality, customer service, and investing in expanding its presence in both physical locations and online platforms. Additionally, Currie emphasized that Greggs’ ability to continuously adapt to changing consumer preferences and market trends has been key to maintaining this strong momentum in sales and overall brand success.
Improvement in brand health and buzz
The overall brand health of Greggs, as measured by its index score, increased from an average of 25.4 in the prior year to an average of 26.2 by January 9, 2024. Likewise, the brand’s buzz metric, which indicates positive brand recognition, also demonstrated growth, rising from 11.6 last year to 12.8. This improvement in brand health and buzz can be attributed to various factors, including effective marketing strategies, product innovations, and exceptional customer service. The focus on healthier menu options and embracing various dietary preferences has played a significant role in driving positive consumer sentiments and contributing to the overall growth of the Greggs brand.
Product line expansion and digital accessibility
Currie attributed the brand’s popularity to the expansion of its product line, greater digital accessibility, and longer operating hours. By the end of 2023, 710 Greggs stores were offering delivery through Uber Eats, and the brand maintained its delivery partnership with Just Eat. This growth in delivery options allowed customers to enjoy Greggs’ products from the comfort of their own homes, increasing sales and customer satisfaction. Furthermore, the brand continued to innovate and diversify its menu, appealing to a broader range of clientele and consistently staying relevant in an ever-changing market.
Strategic expansion and optimization
In an attempt to provide customers with easier access to their products, Greggs opened 220 new stores last year while closing 75. This strategic expansion has led to a net increase of 145 stores, enabling the bakery chain to reach a wider range of customers across various locations. By focusing on areas with higher demand and closing underperforming outlets, Greggs has optimized its operations and created more opportunities for growth.
Challenges posed by wage inflation
While confident about making progress in the upcoming year, Greggs acknowledged that wage inflation presents a challenge for 2024. By April this year, the UK’s minimum wage for workers aged 21 and over is set to increase to £11.44. This significant rise poses the risk of increased operating costs for businesses like Greggs, which rely on a large workforce to maintain their extensive network of shops. To mitigate this potential issue, the company will have to carefully balance staffing levels and operational efficiency while continuing to prioritize customer satisfaction and the quality of their products.
Employee wages and consumer incomes
The company emphasized that all employees are paid above the existing national minimum wage, regardless of age. Although wage inflation may pose difficulties, Greggs also observed that higher pay rates across the economy could support consumer incomes. As a result, this increase in consumer incomes may lead to a boost in overall spending, benefiting businesses like Greggs in the long run. Furthermore, maintaining competitive wages for their employees not only attracts top talent but also fosters employee satisfaction and loyalty.
Optimism for increased sales and market dominance
Given that £2 out of every £100 spent in UK physical hospitality venues is spent at a Greggs establishment, the brand remains optimistic that higher consumer incomes will lead to increased sales. As the economy recovers and purchasing power improves, Greggs anticipates that more customers will indulge in their affordable yet delicious offerings. This, in turn, could boost the company’s overall revenue and solidify its position as a leading food-on-the-go retailer in the UK.
First Reported on: marketingweek.com
Frequently Asked Questions
What factors contributed to Greggs’ surge in like-for-like sales?
Several factors contributed to the surge in like-for-like sales, including a return to stable pricing, continuous efforts to innovate and adapt to consumer demands, enhanced product quality, exceptional customer service, and increased brand recognition.
How has Greggs expanded its product line and digital accessibility?
Greggs has expanded its product line by offering a diverse menu catering to various dietary preferences and focusing on healthier options. It has also improved its digital accessibility by partnering with delivery platforms such as Uber Eats and Just Eat, along with extending operating hours.
What measures has Greggs taken for strategic expansion?
Greggs has opened 220 new stores and closed 75 underperforming outlets, resulting in a net increase of 145 stores, to provide easier access to its products and reach a wider customer base.
What challenges does wage inflation pose for Greggs in 2024?
Wage inflation poses the risk of increased operating costs for Greggs, as the UK’s minimum wage is set to increase to £11.44 for workers aged 21 and over. The company will need to balance staffing levels and operational efficiency while maintaining product quality and customer satisfaction.
How does Greggs view the impact of employee wages and consumer incomes?
Greggs pays its employees above the national minimum wage and acknowledges that higher pay rates can support consumer incomes. Increased consumer incomes could lead to a boost in overall spending, benefiting businesses like Greggs while fostering employee satisfaction and loyalty.
What is Greggs’ outlook for the coming year?
Greggs remains optimistic that increased consumer incomes will lead to higher sales. As the economy recovers and purchasing power improves, the brand anticipates that more customers will indulge in their offerings, boosting overall revenue and solidifying Greggs’ position as a leading food-on-the-go retailer in the UK.
