Dive Brief:
- Five Utah grocery chains owned by Associated Retail Operations are featuring farmers markets at their stores this summer, according to The Shelby Report and Progressive Grocer.
- The Eat Fresh, Eat Local display features locally grown produce from 26 Utah-owned farmers. An expanded selection of fresh fruits and vegetables is offered daily in the stores’ produce departments and in more traditional farmers markets-style tents set up in the parking lots on Saturday mornings.
- Associated Retail Operations, which operates 42 stores under the Dan’s, Dick’s Market, Fresh Market, Lin’s and Macey’s throughout Utah, is a subsidiary of Salt Lake City-based Associated Food stores.
Dive Insight:
Locally sourced products — including produce — have become a big business for supermarkets. What began as a limited marketing effort to capitalize on the surging interest in farmers markets and community-supported agriculture has evolved into a major growth opportunity as consumer desire for fresh foods, emerging brands, unique flavors and transparency has expanded.
The U.S. Department of Agriculture predicts sales of locally produced foods, which hit $12 billion in 2014, will surge to $20 billion by 2019. Management consulting firm AT Kearney found 78% of consumers said they will pay more for local products throughout the store.
The potential growth, coupled with consumer interest in “buying local,” has piqued the interest of everyone from small cooperative grocers to Walmart that are investing in products that are grown, baked, butchered and manufactured in the same communities where their stores operate. Now, the ultimate in local sourcing is taking root inside a group of Utah area supermarkets, which are hosting farmers markets at their stores all summer long.
Sourcing from local farmers offers several benefits. It tightens the supply chain, cuts transportation costs, promotes sustainable practices and enables micro-merchandising of stores. The real game-changer in the eye of the consumer, however, is the freshness and product quality associated with buying local and the fact that the retailers’ efforts support regional economics. “As locally owned stores, we understand the importance of supporting local businesses, especially our farmers and growers,” Danni Barnhard, produce operations manager for Associated Retail Operations, told The Shelby Report.
Local farmers are eager to work with supermarkets to gain exposure and sell more produce than they probably could through conventional channels, including traditional farmers markets. Still, some issues surface when doing business this way. For one, it's hard to match all the different produce and the needs of the store — it's not always easy to find a specific commodity and deliver it in the quantity the supermarket location needs.
Retail distribution systems also are designed to deliver as much uniform-quality product as possible — something that local producers, which are vulnerable to supply shortages, weather and other issues, often struggle with. Just getting products to the stores in any efficient manner often presents an obstacle. And suppliers also must pass food safety checks and quality inspections, which can be time and cost intensive for both parties. What this ultimately means is a price premium for consumers that so far they have been willing to pay.
Despite some challenges, retailer-local producer tie-ups can provide the unique shopping experience that consumers seek, which could prove fruitful in driving traffic and sales.