Farmers’ markets gaining traction in US offer opportunities and challenges

Farmers markets gaining traction in US offer opportunities, challenges

Sales at farmers’ markets currently may be only a small fraction compared to conventional grocery stores, but the channel is gaining traction – especially among millennials – and offers a unique marketing opportunity for agricultural producers of all sizes, according to USDA and new research from the Food Marketing Institute.

“Farmers markets serve as significant outlets by which small-to-medium, new and beginning, and veteran agricultural producers market agricultural products, generating revenue that supports the sustainability of family farms and the revitalization of rural communities nationwide,” according to a proclamation signed Aug. 3 by Secretary Sonny Perdue declaring this week National Farmers Market Week.

As such, farmers’ markets contribute about $9 billion annually the US economy – and play an important and “expanding” role in agricultural marketing opportunities “that assist and encourage the next generation of farmers and ranchers, generate farm income to help stimulate business development and job creation” and “build community connections through rural and urban linkages,” according to the proclamation.

Farmers’ markets also can be a good starting point for entrepreneurs launching packaged foods, as they allow young companies a chance to directly interact with and gather feedback from consumers.

The growing threat to conventional retail

Even though growing consumer interest in farmers’ markets still only accounts for less than 1% of produce sales in the US, consumers’ growing attraction to the channel is a “red flag” for conventional stores, according to a new study from the Food Marketing Institute.

In FMI’s Power of Produce report released this month, researchers found 37% of all consumers periodically shop for fresh produce at farmers’ markets and 16% from roadside produce stands – figures that are far higher, and therefore more threatening, than those for who shops for produce at organic specialty stores (17%), ethnic stores (9%) and either online or through meal kits (3% each).

While occasional purchases at farmers’ markets and roadside stands “may not be huge or regular baskets … there are consequences nonetheless,” the researchers note.

“The main one is the potential impact of losing more than just the produce dollar and losing the trip to formats strong in convenient access to basic/essentials and center store pricing,” the report explains.

Why consumers switch channels for produce

To put the impact of the sales redirect to farmers’ markets in broader context, FMI’s Power of Produce report looked at who “switches” channels for produce versus other food items.

It found 21% of primary shoppers change channels for produce, of this 21% go to farmers’ markets, farm direct and produce stands. Alternatively, 16% go to specialty or organic stores and 10% go to club stores.

The main reasons for making the switch are for better quality or fresher produce, according to 50% of survey respondents. In addition, 29% said they switched for better variety, 27% for better prices and 19% said for better organic and local selections.

How supermarkets can defend produce sales

FMI encourages supermarkets to counter this trend and protect their produce dollar share by creating “their own farmer-to-consumer experience, both from a sales benefit and sales loss standpoint.”

To do this, it recommends stores co-market with farmers – giving them a web presence, providing retail signs at the farm and around the property and playing up the specific farms in their stores.

Other strategies include locking in long-term, exclusive relationships with farmers – especially for unique regional items. Also, FMI suggests, focusing on freshness and explaining to consumers the environmental impact of their partnerships with farmers. 

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