Beyond a bakery? Looking further into Greggs’ brand strategy

The story of Greggs is one of a traditional British bakery turned huge high street player.
Oliver Fenton

June 12, 2018

Greggs was started by local bakers in the North East and the brand rose stratospherically, a like-for-like increase in sales in Q4 2017 being the 17th successive quarter of growth for the brand. The majority of this was achieved by sticking to what they did best - sausage rolls and pasties. Now only Costa Coffee can match the number of sites Greggs has, whilst the brand enjoyed a pre-tax profit (EBIT) of £81.8m in 2017 vs. Costa at £65m. Moreover, according to Morar HPI's BrandVue Eating Out daily tracker, 70% of all UK consumers would consider going to Greggs, with one in three people viewing Greggs as one of their favourite places to eat.

However, the Greggs’ story is not only one of sticking to what they do best – the brand has taken risks in both its marketing and brand strategies; with some paying off and others quickly forgotten. This year, £125 million of investment and 130 new stores are scheduled, but recent profit warnings have led to the question: is Greggs’ strategy paying off?  

Strategic decisions – good and bad.
In 2016 Greggs decided to offer something wholly different – a healthy menu was introduced. This approach allowed their offer to appeal to a new audience – the health-conscious public, who tend to be younger and more affluent than traditional bakery customers. BrandVue data shows that in June 2017, only 2% of the UK public associated Greggs with healthiness. In a year this has risen to 10% of all consumers, surpassing Costa Coffee, Five Guys, McDonalds and Café Nero’s – key high street competitors. This is further evidenced by sales data as well. Since the healthy menu was introduced, overall sales at Greggs have risen by 6.8%, with healthy options now taking over 10% of all sales.

Greggs have also tried to tackle the coffee shop market. In 2011, Greggs’ ‘Moments’ – coffee-only outlets – were trialled in department stores and shopping centres in Newcastle. The public were not convinced, and ‘Moments’ was discontinued. However, rather than completely cancelling the project, Greggs decided to bring it ‘in-store’ – their coffee offer was rejigged and competitively priced to compete with the largest coffee shops in UK.

Today, Greggs’ sell over 1m coffees a week, with the frothy cappuccino being their third most popular item. This example shows that, although their initial strategic decision did not pay off, they reimagined the idea in a way that would suit the brand instead of discarding it completely.   

Marketing – mistaken or magical?
The marketing team at Greggs have also challenged brand perceptions. In the run-up to Christmas 2017 they infamously portrayed the nativity scene, replacing baby Jesus with a sausage roll. For Valentine’s day, they promoted a romantic meal for two.  Both laughable takes on their own image but which resonated better with the consumer? In both early December 2017 and mid-February 2018, BrandVue data shows that 38% of the public had heard something positive about Greggs, but that the baby Jesus sausage roll created more negative buzz than the Valentines meal. Despite this, brand affinity (how well liked the brand is among the general public), rose 10% to 53% in both cases. Similarly, consideration peaked at 71%. Sometimes, all news is good news.

Present situation
Most recently however, there has been sniff of embattlement. Greggs reported that the prolonged and harsh winter of 2017/18 caused a like-for-like sales to drop of 1.3%, leading to a warning to expect a flat year in terms of profit growth.

Blaming freak weather events tends to be an easy way to placate stakeholders, but rising rents and a saturated, tentative consumer market, problems affecting all eating out brands at the moment, are certainly other reasons for this challenging outlook. BrandVue Eating Out shows that consideration of the brand has decreased 5% its mid-buzz high of 71% on Valentine’s Day, while preference has dropped 7% to 27% in the same period. A definite ‘softening’ of the metrics is occurring.

Greggs have shown that resting on their laurels is not their philosophy, so what can be done to further improve the brand?

The future
It is clear that Greggs are very dependent on a specific type of occasion. 44% of all customer visits are conducted while out shopping, with a “quick refuel” far behind in second place at 14%. Consumers still don’t plan to visit and don’t stick around when they do, so efforts could focus on increasing dwell time which offers an opportunity to increase spend. Indeed, Greggs have already noticed this and are in the process of introducing a hot meal menu at traditional meal times to contend with QSRs. The launch of their drive throughs, the first opening in early 2017, are another attempt to target the QSR market.

Achieving a greater variety of food purchases would only improve Greggs bottom line. BrandVue shows that 3 in 4 visitors to Greggs buy only light savoury bites – a clear indication of a single type of offer. But, surprisingly, only 1 in 10 purchases include a light sweet bite – there looks to be an opportunity here to use the popularity of coffee to develop special ‘coffee and Danish’ deals.

BrandVue data will show how new initiatives resonate with the public, with clear evidence at a subgroup level as to exactly how consumers are responding.

How can other high street brands learn from Greggs? Key to making successful strategic decisions is knowing how they can deviate from the pre-existing perceptions among consumers. Greggs have spotted some trends before they became widespread; and implemented their change of direction without alienating their current customers.

For instance, take Greggs’ latest publicity stunt a week ago, directed at the market they seem set on appealing to. For one day Greggs’ changed their branding to ‘Gregory & Gregory’, selling healthy options to a hipster audience at a food festival unaware that the produce was in fact from the famous bakery. Cue the prolonged descriptions of ‘essence of vinaigrettes’ and startled expressions when the cheap and cheerful origin of the produce was revealed. This approach not only emphasised that their quality is on par with fashionable independent cuisine but also mocked the trend, saying ‘we are still the Greggs you know and love’.   

Greggs does prove that risk-taking can be beneficial but, in the current climate, research and consumer insight should supplement decision-making to ensure that the best direction is taken. This is a time of opportunity for the whole of the high street.


This article was originally published in Propel Friday Opinion.
Image:  © Greggs Plc

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