Local Foods Retailing Memo: Sacramento, California-Based Raley's Supermarket Chain 'Doubling-Down' On its Local Foods Merchandising and Marketing

Sacramento, California-based family-owned regional supermarket retailing powerhouse Raley's is expanding it's already aggressive local foods merchandising and marketing programs in a number of ways, clearly visible in its stores and in it's multi-media advertising.

Among the increased local foods merchandising and marketing efforts the 129 store regional supermarket chain is making include:

>Labeling all foods grown or produced within a few hundred miles from its Sacramento, California base with eye-catching "locally-grown" and "locally-produced" shelf signs. This includes fresh produce, meats, perishables and dry grocery items, including natural, organic and specialty foods offerings.

>Labeling foods grown and produced in California, but farther than a few hundred miles away from its Sacramento base, with "Grown in California" shelf signage.

>Increasing the number of exclusive deals it signs with local farmers, buying the local growers' entire fresh produce crops, and touting the locally-grown fresh fruits and vegetables by building massive displays in store produce departments, running large front page ads for the local items in the retailer's weekly newspaper advertising circular, and often running full-page color ads in the major daily newspapers in the grocer's market regions featuring such local produce such as corn on the cob, strawberries, melons and other fruits and vegetables grown by local farmers.

Raley's contracts for the entire crop of a given grower (which can be expensive), which are grown by top-quality farmers, because locally-grown produce is now so popular in California that it gives the retailer a major competitive advantage to do so. It touts not only the local aspect of the fresh produce items, but the exclusivity to Raley's as well.

>Working closer with local natural, organic and specialty foods' producers and vendors by authorizing their local food and grocery products in the stores, promoting the local items more extensively, and partnering with the local producers at special events like community food fairs and charitable events designed to increase awareness and sales of locally-grown and produced food products.

>Creating more "local foods" in-store displays and cross merchandising the local items both by meal complementary merchandising techniques and by local region.

Offering locally-grown fresh produce at reasonable prices rather than doing what some food retailers do and selling them for a premium.

Conducting more frequent in-store local foods sampling events, often having numerous local foods producers, including farmers, do the tastings in the stores at the same time.

Raley's, which is the food and grocery sales market share leader in the Sacramento region market, and has stores under the Raley's, Bel-Air Markets, Nob Hill Foods and Food Source banners elsewhere in Central and San Joaquin Valley, north of Sacramento, in the San Francisco Bay Area and in Nevada, has long positioned itself--and is--as the local grocer, even though the chain has grown to 129 stores and nearly $4 billion in annual sales.

Along with its extensive--and increased--local foods merchandising and marketing commitment, the supermarket chain has a charitable foundation that gives millions of dollars to charities in Sacramento and the other Northern California regions where it operates stores.

In addition to the foundation, the corporation itself donates millions of dollars in cash and in-kind food donations to non-profit groups, charitable organizations and food banks and pantries throughout Northern California and Nevada.

The grocer also has a program in which customers can select a card in either $5, $10, or $20 amounts at each checkout lane as a way to make a donation to local food banks. Shoppers select the card while waiting to get checked out, give it to the store clerk as she rings up their purchases, the clerk scans the card, and the amount goes into a special account, 100% of which is donated to programs to feed the hungry. Raley's matches a portion of the total funds donated by customers each year.

Raley's also funded Sacramento's fairly new state-of-the-art baseball stadium for the city's super-popular Sacramento Rivercats minor league baseball team. The baseball stadium, called Raley Field, is packed every night during the season with families who as far as they are concerned believe the local minor league team is every bit as enjoyable to watch as a major league baseball team is.

Raley's runs all sorts of promotions in conjunction with the team and stadium. The grocer also gives out hundreds of tickets during the season to lower income families and children. To say the River Cats are a hot ticket is the understatement of baseball season. They draw more fans on many nights than a lot of major league baseball teams in parts of the U.S. do.

Raley's was a first-mover in California and national food retailing in terms of getting into local foods merchandising and marketing in a serious and major way. The added efforts and programs started by the grocer a few months ago and increasing even more recently are positioning the chain as one of the foremost local foods food retailers in the U.S.

It's paying dividends for the supermarket chain as well; that's why Raley's continues to add more elements and aspects to its local foods program.

Others like Safeway Stores, Inc. Whole Foods Market, and numerous regional chains, multi-store independents, single-store independent grocers and natural foods retailers also are into local foods merchandising in a big way in California.

In fact, those few food retailers who aren't "going local" are really at a big disadvantage, as most grocers and California market observers will tell you the local foods movement is growing much faster than the organic foods movement is in the Golden State.

In part that's because the organic foods movement is more mature, and still is growing considerably. But that's really only a small part of the equation. the major reasons the "buy local" is growing faster than the organic consumer movement right now in California is because it hits on so many hot buttons important to the state's consumers. These include freshness of product, price, environmental concerns, food safety concerns, desire to support local agriculture, and many more.

Raley's own research identified this growing movement some time ago, and that along with the best indicator, sales of locally-grown and produced food products in the grocers stores, is encouraging the family-owned supermarket chain to grow its local foods merchandising and marketing programs even more.

Local Foods Guest Memo: Palm Beach, Florida Post: Local Foods Movement Booming in the Sunshine State of Florida USA

At age 6, Katie Shirley (pictured above) just might be the youngest local family farmer, as well as the most adorable, in America. Katie, who's parents own Jupiter Farms in Jupiter Farms, Florida, and her three siblings, ages 4 -to- 12, have their own farm on the family plot. That local foods' producing farm is called Veggie Kids Farm. The four young local family farmers sell their vegetables at the farm and the local green market. They also give their neighbors some of their overflow, since the kids are said to have not only cultivated bumper crops of vegetables at their local farm but green thumbs as well. (Photo: Allen Eyestone. Courtesy: The Post.)

Natural~Specialty Foods Memo Editor's Note: The local foods movement is booming in Florida in the United States, according to an article in today's Palm Beach Post newspaper, which is based in Palm Beach, Florida.

According to the piece, three major factors are driving the growth of the local foods' movement in the state: the soaring cost of food, the seemingly never-ending gasoline price hikes, and a concern on the part of consumers over the safety of the food they eat, especially that from far away.

Sighting one example of the growing popularity of locally-grown fresh produce in Florida, the Palm Beach Post story sites the fact membership in the Florida chapter of Local Harvest, the Santa Cruz, California-based "grow-local, buy local" foods organization has jumped to 250 members this year, from just 68 in 2004. Local Harvest members include farmers' markets, local family farmers, local food purveyors, and food stores and restaurants which sell locally-grown foods, among other businesses and groups.

U.S. membership in the Local Harvest local foods support organization has tripled in the last four years, from a mere 5,413 farmers and local foods-oriented businesses and organizations, to 13, 740 at present, according to Guillermo Payet, the founder and president of Local Harvest based in the Northern California coastal city of Santa Cruz.

Florida, the Sunshine State, is fourth behind California, Texas and New York in population, with about 19 million residents.

It's not called the Sunshine State for nothing. One of the most productive agricultural states in the U.S., Florida produces 75% of all the oranges consumed and used to make orange juice in the U.S., and supplies nearly 40% of the world's orange juice via its orange crop, for example.

the weather and soil in most of the state is conducive and welcoming for small farmers to produce lots of local fresh fruits and vegetables, which is another reason the local foods movement is growing so much in the Sunshine State.

Read the article, "Demand booms for local produce as fuel prices, safety concerns increase," in today's issue of the Palm Beach Post here.

What the piece reports on and discusses regarding the boom in local foods in Florida echoes what's happening across the U.S., from giant California, rainy Washington State and the Empire state of New York, to nearby New Jersey and Pennsylvania, and smaller states like Montana and Vermont, along with so many others.

Locally-grown and buying locally is hot in the U.S. just like it is in Western Europe and Australia for example at the moment. We think its a trend and not a mere fad.

Retailers who ignore the local foods movement do so at their own peril, in our analysis. Food marketers that aren't yet getting involved in the local foods movement if they are able to also are missing the boat we believe.

The good news is that since it's a solid trend rather than just a fad, there's still time for both retailers and marketers not involved in local foods marketing and merchandising to get involoved. But remember, like in all business activities, there is an advantage to being a first-mover.

Produce Category Memo: FMI Annual Survey Shows U.S. Consumers Prefer 'Locally-Grown' Produce Over Organic; Bulk Over Store-Packaged

The just released annual Food Marketing Institute (FMI)-Prevention magazine "shopping For Health 2008" consumer survey offers some significant shopper data in the fresh produce category.

This year, for the first time in the annual survey's history, consumers chose locally-grown produce over organic in terms of shopping preference.

When the cost is the same, 50% of the 2,700 adult consumers surveyed by research firm Harris Interactive for FMI and Prevention, say they would choose locally-grown fresh produce over organic, which only 28% of the respondents sited as their preference compared to local fruits and vegetables.

The 2,700 consumers surveyed also said they prefer bulk produce over store-packaged. A mere 9% of the U.S. shoppers polled said they would choose store-packaged produce over bulk, particularly if the bulk produce is locally-grown.

The only exception to that rule is fresh strawberries. If and when packaged strawberries are cheaper in-store than locally grown or organic berries, 45% of the survey respondents say they would buy the packaged variety. However, 34% would purchase locally grown and 22% would choose organic strawberries even if both varieties are more expensive than the packaged ones.

This finding is a bit of an anomaly however. First, most supermarkets and food stores in the U.S. sell strawberries in plastic tubs, thus meaning the majority of fresh strawberries, whether locally-grown, conventional or organic come packaged.

Second, the fresh strawberry season in the U.S. last for only about 4-5 months. The rest of the year the berries come from places like Mexico or Central America. These imported strawberries are almost always pre-packaged, so it makes the finding a bit of a moot point.

Additionally, since for at least half or more of the year, locally-grown strawberries aren't available to U.S. consumers--and in some part of the country local strawberries don't even exist-our analysis is that retailers shouldn't pay a lot of attention to this finding, although we do think it's illustrative of the overwhelming preference American consumers have for buying bulk produce over store-packaged produce.

The fact 50% of the 2,700 U.S. consumers surveyed choose locally-grown produce over organic (28%) is big news however. And, the annual FMI-Prevention survey is widely respected, therefore it should hold some weight in the industry.

Among the reasons consumers sited in the survey for choosing locally-grown produce over organic include:

• Organic is too expensive. A whopping 70% of the 2,700 shoppers surveyed say this is the case.
• There's no difference between locally-grown and organic to justify the higher cost. A solid 39% of consumers polled say this is the case.
• A surprising 33% of the 2,700 shoppers surveyed say they are concerned about the safety of organic produce.

This last finding is something the organic produce industry and food retailers need to pay close attention to. One of the historically key selling propositions of organic produce has been that's its safer and better for consumers because it's grown without the use of pesticides, fungicides, herbicides and synthetic fertilizer.

If 33% of the consumers surveyed are concerned about the safety of organics, yet 50% prefer locally-grown, which means local produce that's conventionally-grown, that essentially means one of the key points of differentiation regarding organic produce is being eroded in the consumers mind and shopping behavior.

Another survey finding the organic produce industry and food retailers who sell lots of organic produce should pay very close attention to is the overwhelming number of consumers in the survey who say organics are just priced too high.

One of the goals of the organics industry has been to try to get a wider spectrum of consumers in the U.S. to buy organic produce and foods, rather than catering to a consumer elite. However, this price perception, which is reflected in numerous other surveys, could prove to not only be a barrier of entry to this goal, but also could contribute to an erosion of organic produce consumers who already buy organic over conventional.

This is serious data. It's especially serious because of the current food inflation climate in the U.S., and elsewhere in the world. The costs of conventionally-grown foods is soaring across the board, and organic produce and other food products are increasing even higher.

The organic industry and major organic produce retailers like Whole Foods Market and others need to find a way to hold the line on the retail price increases of organic produce. If not, we believe there will be an eventual erosion in category sales. This will be the case not just because more an more consumers are opting for locally-grown over organic, but because the costs of organic produce becomes prohibitive for all but high income consumers.

Healthy eating

Regarding whether or not American consumers are or plan to eat healthier foods, the results form the survey offer a bit of a mixed bag.

Below are the key finding from the 2,700 shoppers surveyed regarding their healthy eating habits and plans:

The 'swap-out' factor

Although consumers admit to not always choosing the most diet-friendly option when it comes to unhealthy indulgences in product categories such as ice cream, cookies and salad dressing, many are amenable to healthier choices. The swaps that consumers say they would make:

• Healthier alternatives in the same product category, for example, those with less fat or fewer calories. Consumers reported they would purchase healthier salad dressings (41%), potato chips (36%) and ice cream (27%).

• 100-calorie packs of cookies--23% said they would purchase this over any other alternative-- but 20% of cookie-eaters would not change their habits at all.

• Drink less soda--29% of consumers choose this alternative — but 28% would not change their consumption.

How those who eat healthy succeed

Regarding how healthy eaters succeed in achieving that goal, the FMI-Prevention survey found the following key details:

• Successful eaters say their grocery decisions are driven strongly by goals to manage weight (52%). They are also more likely than average to shop in order to avoid future medical conditions or manage a current condition.

• They develop a plan and stick to it, starting with using a list when they shop--done by 65% of healthy eaters, compared with 42% of all consumers.

• Their plans include eating more fruits and vegetables (87% vs. 63% of all shoppers), limiting foods with trans fats (79% vs. 63%) and reducing portion sizes (79% vs. 47%).

• 83% eat dinner at home five to seven times per week, giving them better control over healthy ingredients, compared with 66% of total shoppers.

Who are these healthy eaters? They mirror the average shopper--that is, six in 10 are women, slightly more than half are married and about one in five is black or Hispanic.

“This survey shows that anyone can eat healthfully,” said Cathy Polley, R.Ph., FMI vice president of pharmacy services. “All they need is determination and direction, which food retailers can provide with nutrition information, in-store dietitians and clinics, often coordinated with supermarket pharmacies.”

This data, especially the finding that 83% of "healthy eaters" shop at grocery stores and eat at home far more than consumers in general do (66%) offers good news to the natural and healthy foods industry, along with retailers that offer lots of natural and healthy products in their stores.

The additional finding that over 20% more "healthy eaters" buy and eat more fruits and vegetables than consumers as a whole, also offers important merchandising insight to the fresh produce industry as well as to food retailers. Targeting this population segment with healthy fresh produce messages will pay big dividends.

Consumers and diet restriction

Another interesting set of finding from the survey of 2,700 U.S. adult consumers is how many of those surveyed are currently on calorie-restricted diets. Below is a snapshot of that data:

• More than one in three shoppers (38%) said they had started a diet in 2007.

• Two-thirds (66%) of these shoppers were still on a diet by November 2007.

• More than half of dieters (57%) said they are on no specific diet regimen; they are merely watching their calories.

The most significant finding here in our analysis is that 57% of those 38% who said they started a diet in 2007 have no specific diet regimen. In other words, they aren't on a specific diet like Atkins or Weight Watchers.

For the natural and healthy foods industry this offers a great opportunity to market healthy products to consumers on diets, which is good for the industry as well as for consumers, since regimented or formula diets seldom have a long lasting positive result.

This finding also offers the fresh produce industry further opportunity to market fresh fruits and vegetables to dieters, since the categories offer perhaps the healthiest diet options available.

Conclusion

The results of the annual FMI-Prevention "Shopping For Health 2008" consumer survey are good news for the fresh produce and natural and healthy foods industries. An overwhelming number of the 2,700 U.S. consumers surveyed indicate they buy, and plan on continuing to buy, lots of fresh produce, be it conventionally-produced, locally-grown or organic--or a combination of all three.

The fresh produce category data offers even further good news and opportunity for those people and groups promoting local foods initiatives, as well as for small, local farmers, food producers and marketers.

The data also offers important information to food retailers who either already are or are considering offering locally-grown produce in their stores. The response: do it if you aren't already doing so. And, if you are already doing some local produce merchandise and marketing, do more of it.

The survey results suggest locally-grown produce is in many ways the new organic. This doesn't mean organic produce is going to go away any tome soon. Not at all. Rather, it means-- along with other data we've seen as well as demonstrable sales of local produce--that locally-grown is right up there with organic as a key marketing and merchandising niche at retail.

The local foods consumer movement has been gaining steady steam for about the last five years in the U.S. In just the last two years or so, it's taken on a full head of steam. We see that head of steam--and the local foods movement--getting only bigger and more powerful.

The fresh produce category offers huge opportunities in the local foods realm. American consumers perceive locally-grown to be far fresher than any other type of produce.

In survey after survey, fresh is the key variable shoppers site when it comes to produce preferences. Since locally-grown fits this "freshness" preference the most currently, the ability to offer fresh, locally-grown produce at reasonable prices is an offering supermarket retailers can make bank with in our analysis.