Consumers want to buy local produce – but can supermarkets manage its distribution efficiently?
Whether it is to do with green concerns over food miles, demand for greater freshness or simply a desire to support local producers during a recession, buying local is a growing trend: it has even spawned a new name “localvores” defined (in the US at least) as someone who eats food grown, usually, within a 50 mile radius.
While most independent food retailers have always sourced locally, and regional farmers’ markets are both commonplace and thriving, the major supermarket chains have also been getting in on the act with sections devoted to locally-made produce or with “outsourced” sections given over to the local bakers, butchers or cheesemakers. Estimates suggest that locally-sourced food and drink sales were worth £4.8 billion in the UK in 2008, with that figure set to rise significantly this year.
For the likes of Sainsbury’s or Tesco “going local” obviously presents some interesting challenges both in terms of local management responsibility and distribution. Large retailers are, of course, highly centralised: buying and ranging is managed from head office and although most supermarkets have been trying to give their stores a regional flavour in recent years, the product assortment tends to be largely common across the chain. Store managers are generally there to manage sales and staff and not to buy products and negotiate with suppliers. With many hundreds of stores scattered nationally can central buyers really get a grip on buying a few dozen jars of “Hampshire Honey” or a few yards of locally-made “Cumberland sausage” to be sold in two or three outlets each week?
Pricing and profits also play a part – as reports this autumn of supermarkets importing plums, despite the UK’s record plum harvest, as it was cheaper to buy abroad than pay minimum wages to pick and pack our own burgeoning crops.
Managing the orders and advance shipping notices can be pretty demanding too. Web-based electronic data interchange and trading hubs can solve the order management issue, as vendors like WeSupply are already demonstrating.
Assuming the supermarkets do solve the purchasing issues, and accept that they must pay a reasonable price for locally-sourced food, there is then distribution. If consumers are concerned about food miles and freshness will they really be impressed to learn that the cauliflowers or cucumbers grown within ten or 15 miles of the store must be delivered to a regional distribution centre 100 or so miles away, to be loaded onto different trucks and driven past the fields where they grew a few days earlier to be delivered back to the local store? Asking these small scattered suppliers to deliver products direct to the supermarket instead would probably be a logistical nightmare and cause chaos at delivery bays.
“The answer,” argues Matt Henson, retail industry director, Europe, at WeSupply, “has to involve the retailer collecting the produce and bringing it to store in a controlled fashion on a daily basis. This would allow smaller orders to be placed more often so that availability is increased and waste reduced, which has the knock-on effect of reducing food miles and therefore, brings costs down.”
And what might retailers use to do all this collecting? Well, what about all those home delivery vans which return empty to the store, but could just as easily arrive with a load of freshly picked raspberries or rhubarb? Obviously urban stores are unlikely to have farms on their doorsteps from which to collect, but the major supermarkets supply rural areas too, and must regularly drive Maybe a few farmers’ wives would be happy to have
their groceries delivered by the same truck that collects the freshly made cheese.past producers as they do their rounds. Certainly such activity would require careful co-ordination, but if supermarkets can manage deliveries to a scattered catchment area in hourly time windows then it surely should not be that difficult to factor collection slots into the same model? Maybe a few farmers’ wives would be happy to have their groceries delivered by the same truck that collects the freshly made cheese or pasties?
As the price of fuel reached record levels last year the need to increase backloading rose steadily up the transport agenda: as fuel prices plummeted in the wake of the credit crunch it became less of a priority. Today the fuel price is once again increasing with forecasts from organisations like the Energy Information Administration in the USA showing the graph continuing to climb upwards as we enter 2010. Growing as steadily is consumers’ fondness for internet shopping, home delivery – and local produce. Maximising usage of all those little delivery vans, might just help solve the problem.
Penelope Ody is a regular columnist for SCS and is a retail market specialist.