Can Grocery Chains Capture The Local Food Movement Momentum?

Articles
February 14, 2013

Can Grocery Chains Capture The Local Food Movement Momentum?

It’s of little surprise that large grocery chains and big-box retailers have begun to take notice of the growing demand for local food reports The Food Institute. Consumers are more willing to pay a premium for locally-sourced food, seeing it as better-tasting, more trustworthy, and more sustainable, according to A.T. Kearney’s Buying into the Local Food Movement report.

It’s of little surprise that large grocery chains and big-box retailers have begun to take notice of the growing demand for local food reports The Food Institute.  Consumers are more willing to pay a premium for locally-sourced food, seeing it as better-tasting, more trustworthy, and more sustainable, according to A.T. Kearney’s Buying into the Local Food Movement report.  However, consumers view large national chains with some amount of distrust when it comes to offering home-grown items, leaving the sector with much to improve on.

Almost 30% of grocery shoppers claim they consider buying food elsewhere if their preferred store does not carry local foods.  When asked about the availability of local foods at their preferred supermarket, 65% claim their store offers at least some kind of locally sourced foods, while that number is only 15% for national supermarkets and 5% at big-box retailers.  When asked about the trustworthiness of different formats, farmers markets and farm stores rank first, followed by natural food stores, and locally owned supermarkets.  Relative to price, farmers markets and farm stores also outperformed all other formats.

Why do they buy local?  Grocery shoppers largely embrace the increase in local food options because 66% think that it aids local economies, whereas 60% think it delivers a broader and better assortment of products.  The carbon footprint impact and the increase in natural or organic production is also considered by shopper.  To most consumers (64%), food is considered local if it was produced within a 100-mile radius of the store, while 37% considers food from the same state to be local.  (In 2008, Congress passed an act that consolidated “regional” and “local” food to include food that is transported less than 400 miles from its origin to the store.)  Freshness is the most important characteristic for consumers (60%), followed by price (30%) and local sourcing.  Almost 70% think that local food contributes to sustainability, while only half think that of organic products.

Perhaps most notably was that the study discovered that a majority of grocery shoppers are willing to pay a premium for local food, with higher income households willing to pay more than a 10% premium.  But at the same time, 63% of lower-income shoppers also claimed that they would pay more for local food.

Nevertheless, there is indeed room for improvement from retailers. Grocery shoppers are generally inclined to buy locally grown produce but often will not do so because they are simply not available (57%), too expensive to buy regularly (37%), or because the selection is sub-par (31%).  Consumers are holding retailers responsible – 41% would spend more on local groceries if companies did a better job of informing shoppers of the food’s origin, while 39% claimed they would buy more if the products were displayed more prominently.

In terms of company specifics, there are a few chains looking to get more involved in the local food sector.  Walmart plans to increase its share of local produce to 9% by 2015, while Jewel-Osco parent company Supervalu buys between 25% and 40% of its produce locally.  Through a partnership between Whole Foods and the Local Vendors Coalition, which helps Georgia growers market produce, the natural food chain plans to feature Georgia Grown vegetables at its Buckhead store.  Meanwhile, McCaffrey’s Market will soon reap the benefits of an earlier arrangement with BrightFarms to have produce grown hydroponically at a new greenhouse just down the road from one of its Pennsylvania-based stores. The first harvest, which occurred in mid-February, provided McCaffrey’s four stores with produce.