With the Spring 'buy local' campaigns under retailers' belts, and Autumn products about to hit their shelves, a survey by Precima has found that 85% of American shoppers say buying local products is important to them, and more than one-third are willing to pay a 15-30% premium for local items.
In addition, 82% report they would increase their monthly grocery spend if local alternatives were more readily available and 87% are more inclined to purchase a local product when they know the story behind the grower or processer.
Only 15% rate large retail chains as excellent at stocking and promoting local products, compared to 71% rating Local Farmer's Market excellent and 23% rating Natural Food Store excellent. More than 40% of those surveyed said large retail chains do a poor job at stocking and promoting local products.
"Local products represent a significant opportunity for chain retailers to attract new customers and capture additional share of wallet from existing customers. Retailers need to draw upon the shopper insight data they collect to understand what is driving this behaviour and then structure their pricing, merchandising and promotions to align with the value consumers place on local products," said Graeme McVie, Vice President of Business Development for Precima, the data analytics division of LoyaltyOne.
Other key findings from the Precima survey included:
- More than one-third of people choose local to support the local economy/local business (37%), followed by the idea that local products are better made.
- Shoppers want to see local products alongside regular products (42%) versus local breakout sections within shelf sets (28%), end of aisle displays (11%) or a mini-local store within the grocery store (19%).
- 60% of shoppers say chain retailers don't stock enough local products.
- 42% say chains don't to a good job at highlighting locally produced items.
- Discounts and bonus loyalty points would motivate shoppers to purchase more local products. Of the shoppers who said that they did not buy local products, price isn't the driving factor. It is a merchandising issue - 42% said 'I don't have time when I'm shopping to distinguish between local and non-local food and products', and 35% said 'There is less variety of local products compared to non-local', compared with 31% saying local products are too expensive.
When asked to rank the importance of purchasing locally sourced foods, fruit and vegetables topped the list with 59% of local shoppers saying it is 'very important' that they are produced and/or sourced locally, followed by locally sourced/produced bread/bakery (38%), dairy products (36%), and meat and seafood (29%) and beer and wine (9%).
The importance that shoppers place on locally sourced products increases for high-value customers across each category, aside from dairy. Of the shoppers in the highest spend per month segment, US$700+ per month, 71% say it's 'very important' to purchase local fruits and vegetables, followed by 48% for bread/bakery, 39% for meat and seafood, 29% for dairy products and 16% for beer and wine.
"We've known for some time that local is an important movement economically and socially," concluded McVie. "But getting local right is not just a 'nice to do', it's vital for retailers looking to drive incremental margin and loyalty; this is true for many retailers, especially large-chain grocery stores who stand to make the most by closing the gap. Sourcing local is only part of the puzzle - it's how you present the value that is going to make the real difference to the local economy, to the shopper and to the retailer's bottom line."
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