To Sell More Local Foods Build Trust

To Sell More Local Foods Build Trust

August 14, 2013
TrendsRetail Industry Insights

In food stores where penny margins produce pivotal profits, merchants could lift performance through local foods—if they secure a supply chain to bring them in, market them prominently, and message customers about their benefits, we say at F3.

Already, seven out of 10 shoppers are willing to pay premium prices for local food, according to new research conducted by A.T. Kearney. Specifically, 38% of 1,300 U.S. adults surveyed say they’d pay up to 5% more, 24% would pay up to 10% more, and 8% would pay more than that.  Just 22% would pay no premium and 8% say the local product would need to be cheaper.

Why would consumers dole out more while they stridently aim to save on food spend? A majority of 66% feel they help the local economy, 60% feel they benefit from a broader and better product assortment, 45% perceive local foods as healthier alternatives, 19% feel they reduce the carbon footprint, and 19% feel they support natural or organic food production (multiple responses).

The aura of local foods helps stores in other ways beyond their direct contribution to sales—they drive store preference choices and trips, and enhance retail wellness image, the Kearney research shows:

  • Almost 30% of grocery shoppers say they’d switch stores to find a better local food selection. About 65% acknowledge their preferred supermarket offers some locally sourced foods.
  • Just 5% say they shop for local foods at big-box retailers, and just 15% do so at national supermarkets, even though these formats offer one-stop convenience. That’s because shoppers trust them least when it comes to local foods.
  • Their trust varies by format. They trust farmers markets (8.2 on a scale of 10, where 10 is most trustworthy), natural foods markets (7.8), and locally owned supermarkets (7.4) the most for local foods. They trust national supermarkets (6.6), big-box retailers (5.4) and online grocers (5.0) the least.

“There is plenty of room for improvement,” says the report. “Grocery shoppers are generally inclined to buy locally grown fruits and vegetables, but often do not do so because the products are simply not available (57%), too expensive to buy regularly (37%), or the selection is just not very good (31%).  Quality is not an issue.”

Indeed, 41% of consumers say they’d spend more on local foods if retailers educated better about the food’s origin, and 39% would spend more on local foods if products were displayed more prominently.

More retailer tips from the Kearney report:

  • Larger grocers need to convince customers they can offer products of equal or greater quality than standard products. Give local choices ample shelf space and location.
  • At the least, dedicate in-store signs to local foods. Or create a new brand for local foods.  Or co-market with local suppliers and have tastings. Use websites and social media to inform customers about local farm suppliers.
  • Test shop-within-shop concepts that local farms could run with their own assortments.

Walmart, which aims to raise its share of local produce to 9% by 2015, and Supervalu, which buys an estimated 25% to 40% of its produce locally, are two of many retailers committing increasingly to local fruits and vegetables.

Readers will be able to find more coverage of local foods in an upcoming August 20 issue of TheFood Journal, our sister publication.