Can Local Food Go Mainstream?
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Can Local Food Go Mainstream?
Published Date
2010
Publisher
Choices Magazine, Agricultural & Applied Economics Association
Type
Magazine
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.
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Sales likely will grow for local food products that have cost advantages or unique quality attributes that
consumers value. Otherwise, it will be difficult for local foods to capture a significantly larger share of
supermarket offerings in the near future. Nevertheless, the examples presented here demonstrate that there
are promising opportunities for local foods to become more readily available in mainstream supermarkets.
Growing entrepreneurial attention to opportunities in this segment of the food system and increased public
funding for research on local foods are likely to yield increased efficiencies and improved product quality.
Research can also improve understanding of potential public benefits from local food systems associated
with factors such as increased civic engagement, growth in local economic activity, and the public health
impacts of diets that include more fresh foods. Starting from a small base, like organics a decade ago, this
segment of the food system has the potential to enjoy sustained, rapid growth. There is much that producers
and mainstream retailers can do together to respond to consumer demand for local products. These
responses can yield solutions that simultaneously benefit producers, retailers, and consumers.
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King, Robert P.; Gomez, Miguel I.; DiGiacomo, Gigi. (2010). Can Local Food Go Mainstream?. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/226229.
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