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How Can Grocery Stores and Farmers Markets Continue To Grow Together?
Grocery supermarkets and farmers markets have had a unique relationship, and while most consumers regularly shop at a grocery retailer, there are many benefits to shopping at local farmers markets.
As reported by The Progressive Grocer, “Grocery stores remain the top retail destination for fresh produce purchases, according to the ‘2023 Power of Produce‘ report from FMI – The Food Industry Association. According to that report, supermarkets get 72% of produce purchases, followed by mass/supercenter stores at 50%, club stores at 34%, hard discounters at 30% and dollar stores and natural/organic stores, each with 17%.”
However, large grocery chains often source their produce from all over the map. It’s hard to know exactly where your food comes from or how fresh it is.
Farmers markets flip the script. You’re buying directly from the people who grow or make the food. Buying directly from farmers has two key advantages. First, it cuts out the middlemen who handle your produce between the farm and the grocery store. This means fresher produce on your table. Second, it gives farmers a better return for their products. They can keep their prices fair, even in a landscape where it’s tough to compete with industrial farming and big corporations.
The distinction between supermarket produce and farmers market produce all comes down to freshness. When you visit a farmers market, you won’t find imported, out-of-season produce. Instead, you get access to many seasonal fruits and vegetables often cultivated using heirloom seeds and sustainable farming methods, and the produce is generally harvested a day or two before it reaches your hands, making it more nutritious. The shorter the journey taken by your food, the more beneficial it is for both the environment and your palate.
Farmers markets don’t just offer fresh produce; they provide a rich, educational experience too. It’s not every day that you get to meet the people who labor to bring you your food. When you chat with a farmer at the local market, you get the chance to discover more about their cultivation practices and their commitment to long-term sustainability. This interaction can be particularly beneficial when you have questions about whether the produce is organic.
Supermarkets don’t have “bad” food by any means, and they have their strengths too. The most notable factors that remain in a grocery store’s favor are its convenience and price. Prices will definitely fluctuate and vary wildly between grocery stores and farmers markets, but supermarkets are great for being able to immediately see your price options and take advantage of any special sales or promotions.
Farmers markets can be competitive with prices, and some vendors might even be open to haggling or giving discounts out on the fly. Some markets are also looking for ways to introduce special discount programs. For example, The Alabama Department of Agriculture and Industries offers a free $50 benefit card to seniors over 60 who meet the income eligibility standards to “purchase fresh fruits and vegetables from farmers markets and farm stands in Alabama.”
Business Between Grocery Stores and Farmers Markets
Some large retail chains choose to support local farmers. One chain has even made it into a retail business. Sprouts Farmers Market touts how it “partners with local farmers across the country to bring goodness into each of our communities. Sourcing local produce from family-run farms across sunny Southern California allows us to offer you a variety of unique items, every season.”
Whole Foods’ Local Producer Loan Program, established in 2006, provides financial support to small-scale producers in the U.S. and Canada, bolstering their business growth as part of the company’s commitment to local suppliers and communities.
Toward the end of 2023, Kroger announced its plans to support local farmers alongside its planned merger with Albertson’s by boosting its local products by 10%. This suggests at least 30 new local items per store. CEO Rodney McMullen affirmed that local suppliers play a significant role in Kroger’s brand promise, and he anticipates their growth with the merger. Currently, Kroger supports local suppliers by selling their produce, offering dedicated shelf space, and collaborating on marketing strategies.
In a move set to bolster local U.K. suppliers, Aldi U.K. has introduced a new “Best of British” section on its website. This new feature aims to promote British-made groceries, allowing shoppers to buy local products quickly and easily. The Best of British range comprises a diverse assortment of items, including meat, dairy, and everyday essentials.
The unveiling of this dedicated webpage follows a similar initiative by Morrisons last year, when the supermarket chain was the first in the U.K. to set up a “Buy British” section. However, Aldi U.K. holds its own when it comes to supporting local growers, having reported that 80% of its sales last year came from U.K.-based suppliers. This makes the discounter the market leader in the sales of British produce.
Successes, Struggles, and the Future of Young Farmers
As a whole, farmers markets are experiencing various degrees of success. For example, in New Brunswick, a new farmers market is quickly gaining traction and popularity month after month. At the beginning of this year, the Delaware Department of Agriculture (DDA) shared how last year’s farmers markets reached sales of $4.14 million, an all-time high record for Delaware and its 17 community-run farmers markets.
On the other hand, in Canada, a historic farmers market in downtown Edmonton announced that it would be shutting down and declaring bankruptcy. The organization, which began in 1903, explained that the end of January 2024 will be its last day of business, but efforts are being made to help vendors find a new indoor space.
Since 2022, the farming industry has been facing the mounting challenge of fostering the growth of young farmers for future generations. For example, Bobbi Wilson, a 32-year-old from Oregon, wanted to enter farming after spending a decade planning for it. Her main challenge was land acquisition, a difficulty echoed by many young farmers, particularly those of color. As per a survey completed by the National Young Farmers Coalition and analyzed by the University of Wisconsin Survey Center, land access and affordability are significant barriers in the agriculture sector.
These obstacles impact the demographic of farmers, with the average age nearing 60. Lawmakers emphasize the need for younger generations in farming to ensure a sustainable food system. During the global health crisis, the importance of local food sources was highlighted. However, young farmers continue to face challenges, including understanding farm bills and loan applications. While the USDA has allocated $300 million to aid young, diverse prospective farmers, advocacy groups assert the need for larger policy changes.
Discussion Questions
Considering the growing popularity of local produce and increasing support from supermarkets, how might the future dynamics between retail and farmers markets evolve?
Given the higher perceived freshness and sustainability of farmers market produce, how might supermarkets adopt these aspects to enhance consumer trust and engagement?
As the agricultural sector navigates challenges like land acquisition and policy understanding, especially for younger, diverse farmers, how could supermarket chains, industry experts, and academia collaborate to foster a more sustainable and inclusive agricultural future?
Poll
Loading …BrainTrust
Jeff Sward
Founding Partner, Merchandising Metrics
Brian Numainville
Principal, The Feedback Group
Sourcing locally is one way supermarkets can support farmers. Obviously this has its complications, but it can also be used as a promotional point to emphasize freshness and community support to shoppers. In turn, this can be translated into charging a premium for what is perceived to be better produce. Market Basket, the New England grocery chain, does this very well and has established strong links with local and regional farmers.
Supermarkets could also hold occasional events with farmers, allowing shoppers to taste produce, meet the people who produce it, and learn about how it is produced. This could, in effect, be a mini farmers market at the store on an occasional basis.
These things help at the margins. However, price is still the overriding consideration for most shoppers and, unfortunately, that tends to favor industrial scale farming and international sourcing.
I believe three things need to be done:
1. Local Produce Sections: Integrate dedicated sections within grocery stores specifically for locally sourced produce from farmers’ markets, promoting regional agriculture and supporting local farmers.
2. Supplier Partnerships: Forge stronger partnerships between grocery stores and local farmers by establishing direct sourcing agreements, reducing the reliance on intermediaries and enhancing product traceability.
3. Technology Integration: Leverage technology platforms to facilitate online ordering and delivery options for farmers’ market goods, providing convenience to customers while expanding market reach for local producers.
I never shop at a farmer’s market, but my local go-to supermarket, Giant Eagle, buys produce locally and labels them as from a local farmer. I suspect customers like that and support local farmers by buying from them via the supermarket. This relationship could increase with other grocers in the area following suit. Everybody wins — the grocery store, the farmer and the consumer.
We are fortunate to live in an area with successful local farmers markets. For 50-60% of the year we buy nearly all of our produce and much of our meats from the local farmers market at a price that is significantly lower on average than any of our local supermarkets. We consistently find the quality and taste to be superior, especially with multiple options for organic produce and meats available to us in our area. While this may be the exception not the rule, I believe there is considerable variation across geographies. Certainly it’s easier to experience this in suburban areas like where we live, and of course rural areas, versus more urban locations where it may be difficult for local farmers to stage a market. However, we have witnessed many young farms shutdown over the years, especially through the pandemic. These farms sustained themselves on the local farmers markets vs relying on selling to supermarkets, mostly because of a lack of volume ins their production to satisfy supermarket chain orders.
We’re seeing many of our local supermarkets trying harder to source from these farms due to the success seen at these farmers markets. Surprisingly, pricing is most often seen quite similar to the cost at the farmers market so stores are definitely trying hard to entice shoppers to buy more from them using the products they desire. This is a good sign for grocery in general!
Farmer’s markets abound in NYC and always seem to be crowded. The first farmer’s market was opened in NYC in 1976. Today there are over fifty. The city makes it possible by supporting these initiatives.
There is also innovative farming in NYC. Whole Foods supports both indoor and rooftop farming in the city, labeling it as such.
Shop in shops are an innovative answer to create and leverage synergy. Many farmers markets are seasonal in many regions of the country but the demand is really year-round. Creating farmers market zones within the physical grocery store could be a nice way to bring in new customers, gain sales and differentiate from other competitors. I’d also like to see local farmers brand themselves better. People like personality and story and local farms are pretty interchangeable. Take a lesson from Chiquita.
“Local” is becoming increasingly important for consumers, especially those who are interested in fresh food. Grocers are labeling more of the products as “local.” Farmer’s markets appeal to foodies, people who are interested in supporting local farmers and people looking to stretch their food budget and still buy fresh produce.
Sounds like local farmers markets were the original DTC model. Efficient and a win-win for seller and buyer alike.
This is interesting timing given the current protests by farmers in France against government actions – but ultimately driven by pressure to lower produce costs by supermarkets.
The future dynamics between retail and farmers markets might evolve in several ways, depending on the consumer preferences, the supply chain efficiency, and the policy environment.
There could be a complementary approach with grocers focusing on ‘the big shop’ and farmers and farm shops focusing on high-quality ‘additions’. Competition could exist in certain consumer segments. Equally there are collaboration opportunites whereby local farms supply specific stores directly – the supermarkets becoming a direct and local channel.
Supermarket chains have been trying to position their produce aisles with locally sourced goods for a long time and most of these efforts strike me as purely messaging. Whole Foods used to profile local growers however since Amazon purchased that chain I have not noticed any profiles, as in, never.
When you shop at a farmers market the experience is stronger, however the number of people willing to wait for the weekend market is (probably) going to remain small. Perhaps bringing the farmers market to the supermarket would work, but I doubt it.
There has and will be continued opportunity for grocery chains to feature local products and support local farmers. A perfect example of this was Henry’s Farmer Market in San Diego which started as a farm stand in 1943 and grew into a chain of 90+ natural stores before being merged/acquired into Sprouts in 2011-2013.
This type of local produce offering appears to be harder to manage with more stores. With over 350 stores across multiple markets, I have seen less focus from Sprouts to have the same level of focus on local farmers. However, being able to claim and deliver the most local produce and also to truly support the local farmers is a worthwhile goal that will likely be rewarded with sustainable and healthy minded shoppers.
New ideas need to be considered to truly make this a win from both sides. Perhaps there are particular days in the week when the local produce are featured? Could there be an opportunity to also offer a slightly loved/damaged section of local produce for value focused consumers? There are opportunities on multiple levels here, but grocers may have to think and do things differently to unlock the local opportunities.
In context, the produce quality and freshness gap between chain stores and farmers markets is wide. Whereas this gap is narrow with quality grocery stores and independents because they can buy, support smaller crops and special varieties. And so farmers markets should coexist in communities surrounded by chain stores for years to come. But meaningful collaboration between titans and small farms is less likely.
Supermarket chains can make small leaps in freshness and quality through speed in the supply chain, in cutting out time at a distribution center, by doing better in holding fresh product, all to a limited upside. Their best chance might be investing in micro loans for small farms to help keep them producing fresh food over the long haul.
The likely collaboration is independents and high quality grocers and small farms have a better, more seamless opportunity to partner and thrive.
It has always been a challenge for shoppers to articulate what local means to them. For some shoppers it is the farm down the road, and for others local means in the same state. But no question that you can’t get much more local than at the farmers market. For supermarkets, partnering with farmers and producers, and being able to tell the local story offers a win for everyone.
Many of our IGA stores source produce locally and go out of their way to promote local farmers, ranchers, and fisheries. It’s not something that big national chains can always replicate. Geissler’s in New England is a great model for how local sourcing can be done effectively – https://www.geisslers.com/geisslers-growers/
I doubt there are many consumers who choose to purchase produce at grocery stores for any reason other than convenience. If there were as many farmer’s markets in every neighborhood as there are grocery stores, the supermarkets probably wouldn’t sell much fruit at all.
Grocery stores do well for themselves, and their communities, when they sell products purchased directly from local farmer’s markets. However, there are issues with costs, transportation, and quantities that local farmer’s markets are able to provide.
Sprout’s is a terrific concept, and I’m confident there will be imitators in the near future. — Db
Just as most retailers endeavor to support local communities, there seems an unofficial “code-of-honor” that gocerers support their local farmers; if for no other reason, it builds goodwill with local customers.
One unique aspect of partnering with local farmers is an opportunity to build the basket. Farmers markets are great sources for recipie ideas and inspiration. Consumers can add new/different products to the basket on the next grocery shopping trip to trial new ideas.
Many groceries today are even taking the local idea beyond produce and spotlighting local vendors across the aisles from ice cream to chutney. This is a good next step for grocerers once they have farm-fresh produce established.
A number of years back, Whole Foods presented a program that hosted farmer’s markets in front of their stores. They saw it less as competing with their own produce department and more of a way to get shoppers to engage with the local farms the chain might source from. When auditing grocery formats around the world I was often struck by how important local sourcing was in low income areas of Latin America and South Africa. In calling out local farms in the produce aisle, retailers such as Pick n Pay reinforce support for the local economy and sustainability.