When it comes to bare-knuckle food-retail competition, farmers' markets may not be the first format that springs to mind. In fact, most of SN's coverage of farmers' markets in recent years has been focused on symbiotic partnerships between supermarkets and local farmers. As many retailers have found, setting up a weekly or monthly farmers' market in a store parking lot will generally boost in-store traffic, and may help boost customer loyalty.
![Retailers can boost customer loyalty by taking part in the popularity of the farmers’ market format.](http://supermarketnews.com/images/0322_SNRowtoHoe280.jpg)
Still, the local food movement continues to grow, and produce departments, in particular, can ill afford to ignore the emergence of a format that is now enjoying more and more mainstream attention. The number of farmers' markets in the U.S. almost doubled during the past decade. The U.S. Department of Agriculture accounted for 2,863 farmers' markets operating in the U.S. in 2000, and 5,274 by October 2009. And, there are currently about 3,400 Community Supported Agriculture programs operating around the country as well, according to Errol Bragg, marketing service division director for the USDA.
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“From a consumer's standpoint you're seeing a greater interest in trying to identify local sources of production, local sources of farmed product, and connecting with the farmers,” Bragg said. “From the farmer's standpoint, this is an opportunity to go directly to the consumer so that they increase their profit margins by removing the middleman. They're able to see higher profits for the products that they grow.”
In 2009, the USDA released its National Farmers Market Manager Survey, a report based on data collected between 2000 and 2006. Although one could argue that the local food movement began drawing much more mainstream attention from consumers around the end of the survey period, the study does contain several interesting data points.
Notably, the number of farmers' markets in the U.S. increased 43% between 2000 and 2005, but new markets struggled to attract vendors, averaging 22 per week compared with the national average of 31. Customer counts were lower as well, with these newer markets averaging about 430 shoppers per market day, compared with the national average of 959. The result is that many new markets launched, but totals sales for farmers' markets, as an industry, grew more sluggishly.
“The large percentage of young markets explains in part why the growth in the number of farmers' markets is not mirrored by a corresponding growth in sales,” notes the report. “Total farmers' market sales in 2005 are estimated to have slightly exceeded $1 billion, compared with $888 million in 2000, an average annual growth rate of 2.5%”
Interest in the local food movement, by all accounts, appears to have picked up steam since the end of the survey period, and new farmers' markets have continued to open at a rapid pace. Still, it is likely that many of these new farmers' markets initially struggle to get established by attracting and retaining vendors and customers.
Top performing markets tended to be located in urban areas on the West Coast and in the Mid-Atlantic states, with markets in those areas reporting average monthly sales of $56,700 and $41,500, respectively. Markets in all other regions averaged $23,000 per week in sales.
The presence of organic products is another factor that appears to have a major impact on sales, although markets that hosted organic vendors also tended to be larger than those that only hosted conventional growers. Seasonal markets that offered organic products reported average monthly sales of $34,700 and 854 customers per week, while seasonal markets that did not offer organics reported $11,800 in monthly sales from 394 customers per week.
The USDA does not have any projections regarding the future growth of farmers' markets, but Bragg said “the expectation is that there will continue to be a steady increase.”
The 2008 Farm Bill included a Farmers Market Promotion Program, offering $25 million in grants over the next three years to support and promote the growth of farmers' markets and other direct-marketing entities around the country, Bragg said.
“Anyone wanting to seek funding to expand their markets, this is one of the better ways for tapping into that kind of support.”
And, groups such as LocalHarvest.org and farmersmarketcoalition.org have made it significantly easier for farmers to connect with potential customers in their area, as well as other local farmers to market their products.
But, judging from the USDA's comprehensive market survey, what upstart markets need most is foot traffic. And that factor alone makes supermarket parking lots one of the more promising locations for local farmers to gather each weekend.
“Farmers markets certainly can be an excellent draw for customers to come into your area,” Bragg said. “It makes good business sense to host these markets in places where you can attract people.”