Is hyperlocal product sourcing a real opportunity for grocers?

Mark Doiron (below) is the former Chief Merchandising Marketing & Supply Chain Officer at Fresh Thyme Farmers Market. Mark previously served in a number of management roles for companies including Schnucks Markets, Sure Winner Foods, and Delhaize America. The views expressed here are those of the author.

During the pandemic, consumers have moved in droves to buy direct from local producers — farmers, fishers and makers — to make sure they had the food they needed and to protect themselves from exposure to the virus as they reduced trips to stores and explored e-commerce. 

In going direct, consumers built new relationships with producers and rediscovered the superior quality and freshness that local offers. Now, as we return to some normalcy in the coming months throughout the country, consumers want grocers to bring those amazing local products from their own communities onto store shelves.

But stronger demand for local isn’t the whole story. There has been a dramatic shift in how consumers think about local products that makes expanding local even more powerful now than it has ever been before.

Consumers have been rethinking how food shapes their relationships with their own communities and how their health is intertwined. Issues of health and immunity, freshness and quality, sustainability, equity and economics are all being rolled together in consumers’ perspectives. As a result, demand for more local has taken on new breadth and strength, and with that, new urgency and power for retailers.

Related:Retailers fill the need for local produce

The solution to this reshaped consumer demand is a move toward community-based sourcing that has been recently coined “hyperlocal,” referring to the close proximity of vendors to the stores they sell to. Hyperlocal is characterized by a diverse group of small vendors providing products to only a few stores, which they deliver direct (direct store delivery, or DSD). However, in every possible way, the requirements of hyperlocal sourcing put maximum strain on grocers in terms of labor cost and supply chain complexity.

What grocers need to make local successful, which is defined as profitable for their company and fair for vendors, is a solution that can lighten the load and resolve inefficiencies throughout the lifecycle of the buyer-vendor relationship.  Something that is efficient to implement and to scale. 

As a grocery merchant with 15 years of experience, I was never able to find that solution — until recently.

In my venture capital work I am beginning to encounter some companies that together represent a possible end-to-end solution for building and managing a local food buying program for grocers of any size.

Related:Local wines and beers find success in the supermarket

Below are three technology companies helping to ease the burden of a local-first strategy. It is important for grocers everywhere to start thinking about their potential to source hyperlocal products efficiently and capture this huge opportunity with consumers.

RangeMe. This company, a leader in helping category managers discover new CPG brands and source them through distributors, has recently announced a number of events with grocers designed to increase the amount of hyperlocal and diverse brands they source. RangeMe provides a solution for efficient CPG vendor discovery.

Forager. Giving vendors an opportunity to pitch you without a system for establishing a commercial relationship can result in frustration and bad press. Forager solves this by providing a procure-to-pay buying platform specifically designed for hyperlocal buying, adding some valuable services like local vendor management, marketing support and analytics. Forager also conducts discovery and vetting, and critically, covers both fresh and CPG. They report 60% greater efficiency in building and operating direct supply chains. Forager has announced some great partnerships recently with grocers focused on pursuing hyperlocal at scale.

Metrobi. This young startup launched in Boston is a new take on a classic problem: efficient B2B logistics. Metrobi’s goal is to grow the business of hyperlocal vendors by expanding their delivery area for DSD programs while reducing the overall cost of logistics.

Together, these three companies are an example of an end-to-end solution to scaling hyperlocal, addressing discovery, onboarding and procurement, and logistics across all product categories. As powerful as these solutions are for grocers, they also work to transform the performance of small vendors, helping them maximize their own selling efficiency and geographic reach while providing a more profitable solution than either traditional distribution channels or internal warehouse markups. Passing this cost efficiency on to consumers helps hyperlocal products power the sales growth we are all looking for by pursuing these programs.

I hope more retailers consider building hyperlocal programs. If I were still a grocery executive, I would be implementing these solutions myself and getting my team excited about sharing the hyperlocal bounty with consumers across my stores.