Photo: Infarm
Kroger brings the farm closer to the table
Grocery shoppers won’t have to make a special trip to the farmers market to get in-season fruits and vegetables right off the farm if Kroger’s new pilot works out. This month, the grocer is beginning an experiment with in-store produce farms.
The pilot, which is being conducted in conjunction with German start-up Infarm, will begin with two Kroger-owned QFC (Quality Food Centers) locations in Washington State with plans to roll out to 15 of the sub-brand’s locations, according to Supermarket News. The on-site, modular farms are hydroponic and built for scalability. Outside the U.S., Infarm already has 500 farms and has partnered with more than 25 major retailers.
Locally grown, farm fresh foods, organics and farm-to-table restaurants have grown popular in recent years, alongside an increased interest in healthy eating and a societal focus on environmental sustainability. The popularity of these products has influenced where consumers shop; in 2014, the U.S. Department of Agriculture (USDA) reported that there had been a 76 percent increase in the number of farmers markets nationwide since 2008.
Vegetables grown in-store might not only meet customer demands for fresh produce, but cut down on energy expenditure, fuel usage and other costs associated with packing up and shipping produce from farms. The practice could theoretically also reduce the price paid by the consumer.
Other U.S. grocers besides Kroger have discussed possible experimentation with growing produce in-store. In late 2016, for example, Target announced an intent to pilot its own vertical farming initiative that would allow stores to grow leafy greens, potatoes and other vegetables in stores and bring them directly to shelves.
Urban agriculture in general has expanded 30 percent in the past 30 years, according to a study cited on Phys.org.
A recent article from The Washington Post referred to indoor urban farming as “the next big thing,” while noting that some challenges such as technological costs, real estate costs, farm subsidies and a repeal of Obama-era regulations promoting the use of energy-efficient LED lighting.
- Kroger to offer in-store living produce farms – Supermarket News
- How urban agriculture can improve food security in US cities – Phys.org
- Indoor farming looks like it could be the answer to feeding a hot and hungry planet. It’s not that easy – Washington Post
- Demand grows for farmers’ markets – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Could you see in-store farms scaling across the country chain-wide for Kroger? What operational burdens might grocers have to consider before attempting this type of operation and how might it change relationships with produce suppliers?
Poll
BrainTrust
John Karolefski
Editor-in-Chief, CPGmatters
Oliver Guy
Global Industry Architect, Microsoft Retail
Since at least the 1980s, maybe earlier, the grocer I worked for in Chicago featured “Super Sweet Corn” during the peak season, available in-store within 24 hours of harvesting from local farms. It was always a big hit. This is a great idea and can really jump on the locally-grown trend shoppers like to see.
If my grocer could make that happen 40-ish years ago, logistically, I cannot believe we couldn’t do even greater things today.
The upside is that we could be pretty certain the food was fresh and likely free of pesticides. That this would run afoul of any number of states’ laws can probably be overcome – but it’s not as simple as it sounds in some places. The bottom line will be value – either they can reduce the cost of the vegetables to a price close to “normal” produce price or it will be so much better tasting that people will pay extra. Keep in mind that while you might reduce packaging and shipping costs, you’ll have equipment (which gets amortized) and labor costs.
At first glance, this seems like a good idea as good quality produce is the reason shoppers will make a farmer’s market a destination on a Saturday as opposed to completing their weekly shopping at the grocery store.
The issue here is that if retailers like Kroger and others start to adopt in-store produce operations, what happens to the local farmers who are currently supplying retailers? Their situation is already very fragile. Could in-store produce operations be the trend that threatens the local small farmer even more and could it possibly be the end of the small local farmer?
I see this as a novelty for a long time to come, assuming it even catches some interest. Consumers look for a different experience when they shop in farmers markets or buy direct from producers. A traditional grocery retailer cannot replicate that.
It will be a niche at best, something similar to an organic section. A specialty farm store along the lines of Whole-Foods for organic may make more sense.
While is it is a worthy strategy to bring fresher produce to customers in a way that minimizes the impact on the environment and collapses the supply chain, I don’t see this rolling out chain-wide. It looks like Kroger has targeted more affluent areas of Bellevue and Kirkland which in my experience are more organic and sustainability driven areas, but much of the country does not have that wealth or mindset and it may not yield the same sell-through. They will undoubtedly learn a lot through the 15 store test about what has worked and does not and adjust their approach locally.
Along with the consumer part of the equation, I would assume that Kroger will have to offer different sizes of the in-store farms based on the size profile of the store which may also limit the ability to go chain-wide. As for the relationships with produce suppliers, I don’t see this as a major area of concern because many retailers already have their own private brand produce and suppliers have learned to operate successfully with both cooperation and competition with their retail partners.
In-store farms could be the next big thing in U.S. grocery stores. My confidence comes from the fact that InFarm operates some 200 farms operated by 25 grocers in Germany, Switzerland, and France. But cost is always a factor. Grocers will need to decide if the investment will pay off.
This is not a new idea. Fiesta Markets did this in Houston over 25 years ago. It built a gorgeous store with a whole hydroponic garden growing vegetables. From the farm right to your table. It was a great store to visit but did not prove profitable. Once the novelty wore off it became less of a draw and too expensive to operate. My vote would be against Kroger’s success. But maybe times have changed and shoppers are willing to pay the price for farm to table produce. If so, stores will have a tough time keeping up with demand.
Mel you are correct — it was an entire wall of a side of the produce department visible through a huge clear window. At the time, this 200K sq. ft. store was a showplace — a lot of the innovations, like the hydroponic garden, too early and radical for mass adoption. Maybe on a smaller scale, like the Kroger test, it may work as long as the cost and retail are not out of price range for the majority of customers.
Sounds like a great idea at the concept level. And sounds really complicated at the execution level. As the center aisle CPG category migrates to e-commerce fulfillment, there is going to be space available in existing grocery stores. Enough space? Investment required? Glad to see a test in motion. “Fresh” may have a whole new definition.
I love this idea and hope it can be implemented successfully. Urban agriculture/farming has an exciting future. There are certainly many supply chain challenges but bringing fresh vegetables directly to urban consumers would be a big win. Shopping visits could increase as shoppers anticipate when certain vegetables are at their peak. Addressing sourcing, transparency concerns and managing waste would benefit shoppers and the environment. This will also germinate new marketing, merchandising, and pricing strategies. A huge plus would be to hire/commission independent farmers to manage this process.
This represents a terrific opportunity for supermarkets, if they can get the logistics, technology and operations issues resolved. While the article correctly discusses the healthy eating and sustainability advantages, I see another real point of positive differentiation, namely the associated theater that in-store farms present.
Face it. For the most part supermarket shopping is boring. In-store farms can bring needed excitement to the mix. Plus, think about other marketing opportunities: school trips to visit the farm, local chefs featuring the in-store farms fruits and vegetables, etc. The only limit will be one’s imagination.
Produce suppliers will need to up their game!
It would be tough to scale this idea in an urban setting but it is a great idea and worth pursuing. The whole farm to table movement, the farmers market phenomenon and the move to more healthy options won’t go away and Kroger is smart to pursue this strategy.
It will be hard operationally to juggle the in-store process model so it is critical to capture this in the pilot locations so it can be replicated flawlessly on a grander scale. It is also critical to understand how the 25 other retailers who use the service today are doing it.
Great move by Kroger!
With climate change, food safety concerns, and transportation challenges all increasing, the idea of in-store farming is intriguing. But it will take years of investment to make it pay off. A productive and scalable in-store farm requires massive technology: robotics, AI, lighting systems. Consumers will be wary at first; a minor misstep could derail the entire project, so attention to detail is critical. Whether traditional growers get involved will depend on the success of in-store farms. They may be best served by creating partnerships with retailers now to stay engaged so they are not on the losing end in the future.
Europeans have long been more concerned about food sourcing and production than we have been in the U.S. So is this potentially a good idea? Absolutely. Better still, locate the “garden” on the roof or the side of the store and fuel it with solar panels. But while it will no doubt generate a good bit of good PR, the issue ultimately is — can enough sustainable demand be generated to cover the cost of equipment, energy, etc. incurred in a chain-wide rollout? I’m not sure the answer to that question is yes — at least now.
While not necessarily the answers to the questions, I have two comments. First, what a great way for a national brand to localize their stores. And what a great way for farmers to have another channel of distribution. Bottom line — it’s a triple win; the grocery store, the farmer and the customer.
In a world where consumers are looking at the concept of “food miles” and the environmental impact that their shopping has means this could provide big competitive differentiation for Kroger. Difficulties could well be around meeting all demand over the course of the season – what happens when one store grows too much of X and not enough of Y? Does it get marked down, moved to another store or wasted? This is key to this inititiave being seen as more than just lip service.
Beyond that it shows how the definition of being a retailer is becoming more vague – does this mean Kroger are now becoming Farmers? 😉
Spend Monday night in Brooklyn at an urban farm. Basil and mint in shipping containers. One container equals one acre of crop. The most underused resource in modern big box retail is the crumbling parking lot that surrounds the property. It is not the solution – but it is the start…
This is a great idea by Kroger, but could be quite challenging from an operational view in-store. It’s a different labor skill set than what is in the grocery store today and obviously requires many new day-to-day operational processes.
Is it worth it? Yes! During peak season you’ll find me and many of my neighbors buying most of our produce at a local farmer’s market. If that suddenly became available at the grocery store, it would be a huge hit in our area. There are other applications for this vertical farming approach and there were a few concepts at GroceryShop this year that caught everyone’s attention.
I expect we’ll be seeing much more of this approach, possibly even more in urban areas to increase fresh food sourcing as well as close to food desserts if the costs can be controlled enough. What a great way to feed areas in need in the future!
It’s certainly a nice idea. I think we’d all like to be able to buy freshly grown produce when we go to the supermarket. The challenge is going to be around scaling this. I think if it does become the norm, it’s going to be a long time before we see them in every supermarket. The problem is convincing customers it’s worth paying more for (if prices go up as a result). Customers talk about things that are important to them (like sustainability, organic etc), but getting them to give those things monetary worth is hard.