Studies: Farmers’ Markets Cheaper Than Grocery Stores

Discussion
May 13, 2011
George Anderson

Farmers’ markets are more popular than ever, with the
number of markets doubling over the past decade, according to the U.S. Department
of Agriculture. There are plenty of reasons given for why consumers go to markets:
quality of produce, support of local trade, etc. But now, if new research is
correct, there’s
a reason that could mean trouble for grocery stores — farmers’ markets
are cheaper.

A study by the Northeast Organic Farming Association of Vermont
(NOFA) that tracked produce prices at 10 grocery stores and nine nearby markets
for three-plus months found that when it came to conventional produce, prices
were roughly the same. But, when it came to organics, farmers’ markets
were nearly 39 percent below the supermarkets.

Lower prices at farmers’ markets
comes at a time when consumers are looking to save money with gas and other
commodities that are at or near all-time highs. A growing number of farmers’
markets are looking to broaden their appeal, with many now taking food stamps,
as well.

An
article
on The Atlantic’s website pointed to other research that found
markets giving supermarkets a run for the consumer’s money.

The Leopold
Center for Sustainable Agriculture compared prices in four Iowa cities and
found markets were often the same or lower than supermarkets. A price comparison
of 15 items by students at the University of Seattle found markets to be slightly
cheaper than stores.

Jake Robert Claro, a graduate student at Bard College’s
Center for Environmental Policy who conducted the study for NOFA, told The
Atlantic
, "It’s promising
to see that, regardless of the region, these studies are holding up. This trend
is going to grow stronger. Maybe that will put the elitist perception to rest."

Discussion Questions: Do farmers’ markets represent a competitive threat to food retailers’ produce business? How should conventional food stores respond?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

17 Comments on "Studies: Farmers’ Markets Cheaper Than Grocery Stores"


Sort by:   newest | oldest | most voted
Gene Hoffman
Guest
Gene Hoffman
9 years 11 months ago

Any venue that sells fresh produce, and also provides new ambiance and a potential new social environment, has a variable impact on chain stores’ produce sales.

To deal with this and the other vicissitudes that challenge supermarkets’ produce departments today, I would set up a farmers’ market on the parking lots of store(s) during the season, work out a shared profit program with farmers, register those sales as store sales and tie-in with local entertainment from area schools. Remember – retail sales benefit from a sense of theater.

Paula Rosenblum
Guest
9 years 11 months ago

I’m trying to figure out why this is a revelation. Of course farmers’ markets are cheaper than grocery store produce. No rent or HVAC, minimal payroll, no fixtures. People who shop farmers’ markets do so because they can get high quality produce at a reasonable price. And it’s very nice to support local businesses.

But, will a once-a-week farmers’ market, with a somewhat limited selection be a serious competitive threat to supermarkets? I don’t think so. What about the things people forgot? What about items not available? What about convenience?

Don’t get me wrong. Farmers’ markets are great, and every time I have the time, I go shopping at the closest one to me (which isn’t all that close). But I don’t buy in bulk because I can’t consume it, and I’m not always willing to get up on Sunday morning to get to the market.

It’s a nice niche market. And will likely stay that way.

David Livingston
Guest
9 years 11 months ago

The farmers’ markets I’ve been to in the Milwaukee area seem to be no threat to conventional stores. Overall they appear to be high priced compared to supermarkets but similar in price to the natural/organic stores. Vendors seemed to be offended when I try to negotiate their prices lower. From what I see there is an advantage of getting fresher foods. Pricing seems to be determined more by what the other vendors charge and not what is on special at the nearby supermarkets. I doubt conventional stores are losing any sleep.

Joan Treistman
Guest
9 years 11 months ago

There are some geographic limitations to setting up farmers’ markets and bringing in the number of consumers to make them worthwhile. So I see some growth restrictions. However, the important lesson derived from the study conducted is that there is good reason, i.e. price for people to purchase at farmers’ markets. And I think we all recognize that outdoor markets convey a feeling of freshness which is hard to duplicate indoors. One perspective not discussed is the consumer experience. If you compare the speed with which shoppers cruise produce in the retail store and compare it with how they linger longer at the market displays, I believe there is evidence of greater personal satisfaction. If prices are competitive between the two venues, I would suggest that supermarkets focus on the customer experience to encourage greater satisfaction and loyalty.

Doug Stephens
Guest
Doug Stephens
9 years 11 months ago

Coincidentally, I just finished a talk yesterday to a group on consumer behavior along the food continuum. There is of course a strong emphasis on locally grown food and increasing concern on the consumer’s part about what they put on or into their bodies.

What I find interesting is that there’s an increasing degree of sophistication and organization in the marketing efforts of farmer’s markets. They aren’t simply a bunch of disparate vendors coming together on a Sunday afternoon anymore. Many are developing impressive web presence and fairly savvy promotional efforts. And I see nothing standing in the way of their continued growth.

So, are they a threat to grocery stores? I’d say they are. To what extent, remains to be seen.

Steve Montgomery
Guest
9 years 11 months ago

I believe the appeal of farmers’ markets is less about price and more about the experience. As Gene pointed out, there are things about shopping at a farmers’ market that are not as likely to occur in supermarket. One is the share value system that is apt to be present–people looking for really fresh produce, a sense of supporting local farmers, etc.

As several people have pointed out, I doubt any supermarket chain sees farmers’ markets as a serious threat. I do agree that it would seem to make sense to find a way to combine the two as Gene indicated.

Warren Thayer
Guest
9 years 11 months ago

They’re generally one day a week, for part of a day. If it rains, few shoppers go. Farmers’ markets, whatever the pricing, are social, “feel-good” events that won’t have huge new impact on supermarkets. When I stocked shelves at the First National stores outside Boston in the early ’60s, the produce buyer always cut back on stock during the summer… because of roadside stands. On the dairy farm where I grew up, we also sold corn and beans at a roadside stand at the end of our driveway, 7 days a week. All you had to do was honk the horn to get us out of the house. Our sales didn’t hurt First National all that much, so I kept my other job.

Ed Rosenbaum
Guest
9 years 11 months ago

Farmer’s Markets are seasonal when it comes to the products they afford. During those seasons, the products are fresher and less expensive. I can recall during summer visits to Maryland returning to Florida with a suitcase filled with fresh silver queen corn and ripe tomatoes. The prices were much less than grocery chains with considerably better product. Pricing has to be lower when there is no long term brick and mortar or salaries to maintain.

Anne Howe
Guest
9 years 11 months ago
As a farmer’s market shopper with over 15 years of regular visits to three different markets, I’ve seen a fair amount of shopper growth in this distinctly “more fun to shop” channel. But the shopper population has not doubled by any means. So while there will be impact on traditional grocers, it won’t be game-changing, particularly in colder climates. By and large I find prices on fresh in-season food at the farmers’ market to be at least 30% less expensive than the grocery stores everyday prices. I am certain if I watched three grocer’s weekly deals online, I could run to three stores and match the prices at the farmer’s market. But why would I? The shopping experience at the grocery store is mundane at best, especially in comparison to the open-market allure, the friendship I have gained with not only the producers but also their regular customers, and most of all the feeling of loyalty to the community. The more we struggle in Michigan, the more loyal we become to helping our own individuals… Read more »
Doug Garnett
Guest
Doug Garnett
9 years 11 months ago

Here in the Pacific Northwest, even organics are more expensive at the farmers’ markets. It’s a fun way to shop, but we pay for the experience.

So this study surprises me.

Jesse Rooney
Guest
Jesse Rooney
9 years 11 months ago

There’s no real threat to retailers here. Someone who likes, say, BLTs isn’t going to stop buying tomatoes from a supermarket because they are out of season or because it is 10 p.m. and the farmers’ market is closed. There might be some loss to retailers, but the convenience of having fresh food year round and being open at all hours will continue to draw farmers’ market partisans to the supermarket time and time again.

James Tenser
Guest
9 years 11 months ago

Reviewing the NOFA study data points here, I can only speculate that many supermarkets use organic produce as a margin-booster. This is a valid category role, but it means many produce items must then be carried in both organic and non-organic varieties, with relative prices set. The paradoxical consequences may include slower average turns, more spoilage, and possibly reduced variety–at least of specialty items. Farmers’ markets and food co-ops worry less about these issues–they just offer what’s in season to shoppers who want local food. Chain food stores do well to provide options for the organics shopper, but they need to pay attention to the price gaps and play up local sources when they can.

Mark DeAngelis
Guest
Mark DeAngelis
9 years 11 months ago
The threat is limited primarily because of locations and hours but there are some very real advantages farmer’s markets have over the chains. 1) Produce is picked closer to full ripeness so it tastes better; 2) While selection is limited, you are much more likely to be able to find varieties (heirloom and others) that are not available in chains and fruits and vegetables that are found only in ethnic stores. I saw Tuscan Kale, Dinosaur Egg Pluots, and Vietnamese Eggplant in the farmer’s market before they ever arrived in the chains; 3) Often the farmers or their helpers can tell you information about the variety that you don’t get from the price tag at the chain; 4) Items like cherries can be still be hand selected (you don’t get the baggie of some good and some not); 5) If you go often enough, you’ll have regular face-time interaction with the same people. This is a level of personal experience that is important to some people because it becomes less of a “transaction”; 6) Odd… Read more »
Lee Peterson
Guest
9 years 11 months ago

I suppose the odds and ends type of shopping that is done at fresh markets could eventually add up, especially in places like California. But in the end, it’s just not convenient enough for the center of the bell curve. It’s random, a bit pricey and not part of everyone’s rote quite yet.

Now, for places like Portlandia, the impact may indeed be more immediate. After all, no one there has a car.

Tony Orlando
Guest
9 years 11 months ago

I stop at the local farmers market in the summer to check out the stuff they offer, and the price difference is minimal. It is about the experience provided by these hard working, 7-days-a-week folks showing off what they have, and it is good for all of us. I don’t feel threatened at all, because it brings more folks to my town, and some of them stop by my store afterwards, and buy lots of meat and deli items. I also try to get to know the farmers; chances are I may get some overflow crops to sell at my place.

God Bless the farmers and pretty soon, our local strawberries will be in (YUMMY)!

Tracey Croughwell
Guest
Tracey Croughwell
9 years 11 months ago

Local farms and farmers’ markets are becoming more convenient. I subscribe to a CSA (community supported agriculture). I get a box of in-season produce delivered to me every week–easier and cheaper than the grocery store. It also makes my busy life more convenient because honestly, I don’t have to decide what to buy.

It’s also important to consider the total market basket of the produce buyers that are choosing to leave the store for the farmers market. I’d like to see data, but my guess is that organic produce buyers are high-value shoppers. Farmers markets will be a threat in warm regions where a wide variety of produce is available year-round; I’m not so sure about colder areas.

Mark Burr
Guest
9 years 11 months ago

They are a lot of fun, but no threat. It’s a great feeling to go and shop, make the rounds and then pick up the best you see. I’ve really missed the Oakland County Farm Market in Michigan. I live in a much more rural bordered area now in the same state, but there isn’t a market that comes close. Well, Eastern Market in Detroit would be the only exception.

Lots of fun, a great outing–it fills the senses and it’s part of the ‘Summer’ experience.

A threat? No. A potential lesson to traditional supermarket retailers? Yes. I can’t for the life of me understand why it’s never been taken advantage of in the parking lots of supermarkets all across the the country.

wpDiscuz

Take Our Instant Poll

How much of a competitive threat are farmers’ markets for conventional food stores in the produce category?

View Results

Loading ... Loading ...