You can only edit a vendor's type (i.e. Bakery) if you created the vendor yourself. You cannot edit the type on the out of the box vendors we give you initially.
If you created the vendor yourself, from the Vendors tab, tap on the vendor you want to edit.
From the Vendor Details screen, tap the top row with their name.
From Edit Vendor screen, select the type you wish to set for the vendor. Make sure there is a checkmark next to it.
Tap the [Done] button to return the the Edit Vendor screen.
From the Edit Vendor screen tap the [Done] button again.