Can Local Food Go Mainstream?

Abstract

The supermarket is one of the 20th Century’s most important marketing innovations. The concept of the supermarket emerged in the 1930s, and supermarkets came to dominate food retailing in the two decades immediately after World War II. Made possible by rapid suburbanization of American cities and expansion of ownership of automobiles and refrigerators, supermarkets transformed business processes and competition for customers at the retail level. They also fostered expansion and new efficiencies for wholesalers and created new opportunities for food manufacturers to develop products for mass audiences. The basic hub and spoke distribution system that has evolved for supermarkets is built around large distribution centers located near interstate highways. These distribution centers receive full semi-trailer loads of product from suppliers and then send full semi-trailers out to individual stores daily or several times per week. Loads sent to stores are comprised of relatively small quantities of thousands of individual SKUs, or stock keeping units, needed to replenish the inventory of tens of thousands of SKUs stored on self-service shelves in a typical store. This system, which is supplemented by deliveries from specialty distributors and direct store deliveries by some suppliers, economizes on transportation and labor. With electronic transmission of orders and payment and computer-based tools that assist with ordering, pricing, and inventory management, this distribution system also keeps transaction costs to a minimum. It is ideally suited for sourcing consistent quality products at low cost from wherever they are available and so has been an integral part of an increasingly national and global food system. This mainstream supermarket distribution system favors large scale suppliers and facilitates long distance movement of products. Supermarket wholesale and retail companies usually prefer to work with a small number of large, reliable suppliers. At the same time, this system is remarkably resilient and quick to adapt. Can it be an effective channel for meeting the rapidly growing demand for local food products? Are there meaningful, long run prospects for a significant “relocalization” of supermarket offerings? While definitive answers to these questions are not yet apparent, there is emerging evidence that helps clarify how the relationship between the local foods movement and the supermarket industry may evolve.