Dive Brief:

• A recent survey from Forager, a Maine-based local food procurement platform, found that shoppers in New England and upstate New York would like to buy more locally grown food, but many retailers aren't meeting their demands. David Stone, Forager's founder and CEO, told AgFunder News that as local options increase, so do sourcing dilemmas.
• "[I]t turns out that it’s a lot simpler to source from one or two large distributors than from many local, small-scale producers," Stone said. "Furthermore, with an increasing number of local produce varieties, the complexity rises exponentially."
• Forager's survey found that 70% of consumers purchase locally grown veggies and 47% buy locally grown fruits, but 55% of respondents noted limited offerings kept them from buying more at conventional grocery stores, compared to 35% at independent and natural stores. The survey also found that while 81% of grocers thought they were delivering fresh items, 67% of consumers said they're completely dissatisfied with local fresh produce in their grocery store.

Dive Insight:

Local foods are one of the biggest trends in grocery since shoppers associate them with sustainability, ethical farming practices and better quality products. Consumers are also generally willing to pay more for this value-add, so offering more local items can be a huge opportunity for grocers. According to Packaged Facts, local food sales reached $12 billion in 2014 and are projected to hit $20 billion by 2019.

However, according to the Forager survey, retailers aren't stepping up to the plate enough to satisfy customers looking for local food items. And those customers are growing — the survey found that 84% of respondents said their shopping list included locally produced food.

The problem, as AgFunder News described it, stems from grocery retailers typically ordering fresh produce from just one or two large distributors, which is a lot simpler than individually contracting with a bunch of local producers. It may be difficult for a large grocery chain to partner with a large number of small farms, but it may be worth it to snag those customers who want locally grown items and are willing to go to farmers markets or directly to the farmers to get it. And though this strategy may be more expensive than dealing with large distributors, the prospect of increased consumer loyalty and willingness to pay more could make it worth the investment. 

The nation's largest retailer has had mixed results with sourcing local products. Walmart doubled its offerings between 2010 and 2015 to the point that local items made up 10% of total produce sales. However, the retail giant has also pressured farmers for lower prices and year-round supplies, which can be a tall order for smaller producers.

Retailers may want to emulate H-E-B, a popular Texas-based grocery chain that has been running an annual competition to identify local products to sell at its 400 stores. Not only has H-E-B increased its private-label portfolio, but it has added 135 products made in Texas to store shelves and attracted new customers looking for premium local fare.