The local food trend is hotter than ever, but large grocery retailers are failing to meet consumer demand, according to a new survey by LoyaltyOne.
In the survey of more than 1,600 Canadians, 61% of respondents said buying local food and beverages is important to them, and nearly half are willing to pay a 15-30% premium for them.
But 60% said what prevents them from buying more local goods is a lack of selection at large chain retailers.
One challenge for retailers is that local vendors don’t necessarily have the product availability needed by the bigger chains, said Jeff Berry, senior director of research and development at LoyaltyOne, which owns Air Miles.
“[Secondly], because most sourcing is done at a corporate head office level, the ability for individual store operators and managers to make decisions about carrying unique local product isn’t there.”
Other top barriers to purchase include homegrown foods not being properly promoted in-store (39%), and therefore difficult to locate, and confusion over identifying local products by their packaging (36%). Higher price ranked as the lowest obstacle at 23%. In addition, 87% of respondents said they would increase their monthly spend if local alternatives were more readily available.
To better capitalize on the local food trend, national retailers can start giving some decision-making ability to local store operators, including product stock and promotions. “All of it starts to point back to better understanding who your customers are at an individual store-level basis,” said Berry.
“Not only do [local] products represent an opportunity to grow basket size, they appeal to a potentially large shopper segment that is already in your store and willing to pay a premium,” said Graeme McVie, GM and VP of business development for Precima, the data analytics arm of LoyaltyOne, in a release.
“It’s incumbent on the retailer to use data to understand what drives this segment. Retailers should structure their pricing to align with the value that consumers place on local products and make certain it’s easy for shoppers to identify what is local when shopping.”
In other survey findings, of those who value local, 91% said farmers markets rank number one when it comes to product selection and promotion, followed by independent grocery stores at 71%. Less than half (46%) said big chain grocery stores are doing a good job of stocking and promoting these products.
The survey also found 72% of those who purchase local products gave supporting their local economy/business as the primary reason. Fruits and vegetables top the list of the most important locally sourced products (98%), followed by meat (90%). Only 38% said it’s important that beer is produced and/or sourced locally, and 35% said wine.
