Farm to Fork: Fighting for a Piece of the Local Food Market
Today's grocers face fierce competition on several fronts: Amazon, hard discounters, delivery apps, and yes, even your friendly neighborhood farmer's market.
In the last two decades, the demand for local food has surged, climbing to $12 billion in 2014 from $5 billion in 2008, and that number is expected to reach $20 billion this year. Those statistics come as no surprise, given the other major consumer trends that have driven recent consumer behavior: sustainability, authentic brand story, transparency, and an increasing interest in healthy options (i.e., clean, whole foods rather than processed).
The demand is clear: customers want locally sourced food. The problem is, grocers aren't delivering – at least, not according to the customer. A 2018 study from Forager, a local food procurement platform based in Maine, reported that 81% of grocers believed they supply fresh foods, yet 67% of shoppers were "completely dissatisfied" with their grocer's local produce selection. 55% said that the limited selection prevented them from buying more at traditional grocery stores.
Millennials have been especially quick to turn to alternative channels – including but not limited to farmer's markets – for fresh produce, according to the Food Marketing Institute's 2019 Power of Produce report. Only about a third of millennials surveyed said they bought produce primarily from a traditional grocer.
Of course, if grocers aren't supplying, shoppers will turn to other channels to get what they want. Fortunately for them, they don't have to look far.
In 1994, the USDA's National Farmer's Market Directory listed 2,410 farmer's markets; by 2017, that number had more than tripled to 8,735. And the data indicates that they stand to keep growing. Customer demand remains robust; new farmer's markets are popping up in both rural and metro areas (USDA). Similarly, CSAs (Community Supported Agriculture) – subscription-based programs in which farmers deliver food directly to consumers – are also on the rise, offering customers an attractive, transparent method of getting their local food.
As of now (Summer 2019), grocers still hold the lead in produce sales, coming in at 51% - but the competition from other channels is growing. So what can grocers do to stay ahead of the game?
The most obvious answer is, naturally, to sell local food. But while that may sound simple, there's more to it than meets the eye. Here are three important aspects of selling local that will keep your customers coming back:
Market your local goods strategically. This has several implications. First, make sure your customers know you're selling local even before they come into the store. Make it clear on your signage, billboards, and digital marketing that you're local-friendly. According to market analysts IRI, shoppers perceive grocers who sell local food as more caring about the community, and this factors into their decisions of where to shop and what to buy (Progressive Grocer).
Second, take advantage of your in-store signs and labels. Customers want to know the brand "stories" of what they buy, and those are often communicated via packaging. Labels and signs can provide information about the farm where the produce was grown, which has been shown to heavily influence shoppers' choices.
Remember that local food isn't limited to produce. Prepared and dry groceries, canned and jarred goods, dairy, milk, meat, and seafood are other examples of food that customers want to see locally sourced. According to a 2015 report from AT Kearney, that demand is expanding – so make sure your shoppers know you hear them.
Make it easy for shoppers. According to Progressive Grocer, half of shoppers buy the same produce over and over, yet 80% want to try new things. So, make it easy for them. Introduce new locally sourced fruits and vegetables, and provide information on what it is and how to cook it. Consider offering value-added local goods, such as pre-sliced fruit or pickled vegetables. Position these items in an attractive display where customers can see and select them easily. If possible, offer samples.
Leverage your online presence. A robust online marketplace has the technology to help you market your local goods and make it easy for shoppers to try them, while providing them with nutritional information, recipe ideas, and the stories behind the brands. Your online offering should be as robust as your brick-and-mortar store, so before you sign with an eCommerce partner, make sure they can provide you with the means to meet customers' demands. This holds not only for locally sourced food, but also for other customer favorites like click-and-collect, meal planning, and endless aisles.
Challenges to grocers
While it may be clear what grocers need to do, it's not as obvious how. Sourcing dilemmas continue to pose a problem for many grocers, who typically order produce from one or two large distributors rather than a variety of small farms. With each new supply channel, the complexity can increase exponentially, as can the cost.
Additionally, local farms are often unable to sell their produce at a discount, as large distributors are; on top of that, their crop yield is limited by region and weather, which means they probably can't supply consistently and/or year-round. This can pose a challenge for grocers who want to keep their produce section well- and uniformly stocked.
Yet experts say that it might be worth the difficulty and the cost. As shoppers have demonstrated, they're willing to pay more and go out of their way for local produce. It might be a steep price, but the payoff is large: increased customer loyalty, improved brand image, and of course, increased sales.
Lastly, don't make the mistake of thinking farmers' markets are low-tech. Not only do farmers today have the luxury of social media to market their goods, but more and more businesses are expanding to provide fresh, local produce online, often delivering to customers' doorsteps via subscription and/or online order. That means the burden is on you as the grocer to step up your local – and online – game.
With strong competition coming from all angles, grocers today face a unique conundrum: sell local, go online, and provide consumers with a unique and seamless shopping experience. To learn more about how locai can help you do all that more, visit us here.