What French Bakeries Get Right About Strategy

Researchers studied 177 bakeries in the city of Lyon to see what happens when you can’t compete on cost.

March 14, 2024

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One would think that if you run a traditional consumer business that can’t compete on costs with more efficient competitors, you would want to avoid them like the plague. But a study of boulangeries in Lyon, France, found that by locating next to more efficient “modernist” rivals, “traditionalists” were able to better highlight their traditions and value.

France’s traditionalist bakers, or boulangeries, should be out of business. Bread prices are competitive, leaving little room for pricing gambits. Ingredients are regulated (by law, the baguette traditionnelle can contain only flour, water, salt, and yeast). If you’re a self-proclaimed “traditionalist” the limitations are even more challenging, as traditionalists don’t permit themselves a variety of time- and cost-saving practices (such as the use of mixes and frozen dough), which are more or less invisible to consumers. Yet despite these disadvantages, traditionalists have maintained a strong majority share of the French bread market despite modernist competitors using more efficient production techniques.

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Laura Dupin is an assistant professor in the Entrepreneurship and Innovation Department at the University of Amsterdam.

Filippo Carlo Wezel is a professor of organization and management at the Università della Svizzera italiana.

Dirk Deichmann is an associate professor at Erasmus University’s Rotterdam School of Management.

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