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Marketing to Independent
Retailers
Written by Debbie Roos, Agricultural Extension Agent.
Contributors: Bill Dow, Farmer, Ayrshire Farm; Stefan
Hartmann,
farmer, Black River Organic Farm; Alex Hitt, Farmer, Peregrine Farm;
James Watts, Store Manager, Weaver Street Market, Carrboro
Crop and Variety Selection
- Don't try and offer something that the buyer already gets locally,
unless you are offering it at a time when local supply is low (see
below). Carve out a niche for yourself by being the first to offer
a new product. Some farmers find it helpful to have a lead product
that buyers will know you by - later on you can add products.
- New farmers should look at where and when they can break into the
market. Try and provide crops when no one else has them, like at the
very beginning or very end of the season, or during the winter. These
are times when farmers' markets are closed and most established farmers
take a well-needed break. Instead of trying to compete during the
busy spring and summer, look at what you are able to produce during
the much less crowded off-season. There are huge opportunities for
seasonal cold weather product.
Harvest and Post-Harvest Handling
- The easiest way to remove the field heat from produce is to not
have it there in the first place! Pick early in the morning, and take
advantage of whatever shade you have. Store product in the shade while
you are working in the field. Store in the cooler if it won't be delivered
until the next day.
- Many farmers grow an excellent product but they kill it before they
deliver it through improper post-harvest handling and storage. Quality
starts in the field and can only decrease after harvest. One of the
most common mistakes is over-handling. As one experienced farmer said,
"they need to quit messing with the product!" Streamline procedures
to decrease handling time. Bunch and pack directly in the field.
- Beginner farmers or any farmer growing a new crop often don't have
a good understanding of "units". If the buyer asks for 20 bunches
of basil, you need to know what a bunch is, and how they want it bunched.
Again, communication is extremely important. Work this out in advance
with the buyer.
- Communicate with the buyer about packaging requirements and expectations.
Ask for their preferences. Make it as convenient as you can for the
buyer. Label bags or boxes of produce with the name of the crop and
the date of delivery.
- Be familiar with USDA grades for each commodity (e.g., extra fancy,
No. 1, etc.). Most consumers want big fruits and small vegetables.
Expect the retailer to specify size and grade. Most are looking for
top-grade produce. A rule of thumb when assessing the quality of your
product is "would I buy this?" Give retailers the best product you
have.
- Pack to standard sizes (e.g., 24 heads of lettuce per box). If you
don't know what the standard is, ask. Bring produce in clearly labeled
containers that stack and store well (no washtubs).
- Understand the forces at play in the market in terms of labeling.
If a buyer has to choose between two similar products and one is labeled
and one isn't, he is going to pick the one with the label. Labeling
is one of the ways you can differentiate yourself in the market. You
can use farm labels and/or UPC/PLU stickers. Contact the Produce
Marketing Association (302-738-7100) for information.
Quality
- Small growers generally can't compete with larger suppliers on price
or volume, so you have to compete on quality and service. Price, quality,
and service are all important, but you can't have all three - you
can't provide the best price, the best quality, and the best service.
If you have the lowest price, then you are most likely sacrificing
quality and service. Provide excellent quality and service at a fair
price, and the buyer should have no reason to look for another supplier.
- Like it or not, California is the standard of the industry. If you
want to compete with California, your product has to look as good
or better since it is so easy for buyers to order from the West coast.
- Retailers are looking for local growers that can provide the quality
and value that will excite their customers. Buying from local growers
has several advantages for retailers. The product is fresher because
it doesn't go from field to packer to warehouse to distributor to
warehouse to store. The producer gets a larger percentage of the final
retail price by working directly with retailers. The retailer gets
an attractive price to offer consumers, primarily by eliminating distribution
expenses such as freight.
- Only deliver products that are market-ready. Leave poor quality
product at home. Even if you do manage to make the sale, it may be
the last time that retailer buys from you. Customers won't buy off-grade
product.
Communication
- Communication is extremely important in establishing and maintaining
a good relationship with the buyer. Start off on the right foot and
stay on the right foot. Maintain communication during the off-season,
letting buyers know what you are planting, and when and how much you
expect to have. This can be done by phone. As harvest time approaches,
follow-up with more phone calls to remind them of what you have, how
much you have, and when it's coming in.
- If there's a problem (deer, weather, disease, etc.) and it becomes
evident you won't have as much product as you predicted, give the
buyer as much notice as possible. Buyers understand that risks are
inherent in crop production, but it's important to keep the line of
communication open - surprises are not welcome! Buyers need a chance
to line up another supplier.
- During the growing season, give as much advance notice as possible
of when you will have a product and when you expect to run out of
a particular item. The more notice you can give, the better, generally
7-10 days. Buyers need to know in advance when your supply will come
in so they can stop ordering from their larger suppliers and let their
current stock run out. Likewise, they need to know ahead of time when
you expect to run out so they can line up another supplier.
- Start establishing a relationship with the produce buyer months
in advance; many will not buy product at the back door. New growers
can ask buyers to share their expectations for quality, size, varieties,
quantities, and prices. You need to have a good idea of what your
production capability is before approaching a buyer.
- Most produce buyers do their ordering early in the week on Mondays
and Tuesdays. Try and give notice on Mondays of what you will have
the following week. Produce buyers in stores are usually there early
in the morning and not in the afternoon. Avoid the time right around
store opening. For example, if the store opens at 9:00 a.m., call
or visit between 6:00-8:00 a.m., or 10:00 a.m.-noon.
Service
- Buyers expect professionalism from farmers. You must think and act
like a business person. Call when you say you will, understand pricing,
provide a high quality product, show up on time, and be reliable.
Use a receipt book, not a scrap of paper or the corner of a box. The
importance of professionalism cannot be overstated.
- Don't promise more than you can deliver. Be conservative in estimating
how much product you will have.
- Products that tell a story sell best. Work with the retailer to
market your farm, your product, and your special status as a local
farmer. You can't say the words "local farmer" enough to consumers
- they want to buy local! Provide materials to the buyer about your
farm. This could be photos, a brochure, or just a typed sheet of background
information. It doesn't have to be fancy (but keep it professional).
Retailers can use this information for newsletters, signage, promotional
materials, etc. It is important for the retailer to communicate with
the consumers, so anything you can provide to facilitate this process
is welcomed.
- Send a personal invitation to the buyer to come visit your farm.
This says you are proud of your operation.
- Do anything you can to make it easier for the retailer to sell your
product successfully. Look for ways to add value to your product,
especially for convenience.
- Work with retailers to plan promotions. If they are going to sell
your zucchini, work with them to plan an introductory feature that
tells the customer that you are the supplier. Later, when the season
is in full swing, they can run a special price promotion to move the
high volume of high quality product.
Price and Payment
- Local growers should get a higher price than California growers
because local products have usually been harvested within 24 hours
and so have a longer shelf-life, and therefore less "shrink". Shrink
is the amount that is never sold and is thrown away. For example,
a box of lettuce has 24 heads. If it was shipped from California to
North Carolina, it was harvested a minimum of 4-7 days before arriving
at the store or restaurant. The buyer will most likely end up throwing
away 6 out of those 24 heads. Buyers may pay more per head for local
lettuce but end up with less shrink.
- Some farmers will have an oversupply of something and then drop
the price drastically as they scramble to dump it somewhere; you are
not doing yourself any favors and you are hurting other farmers. Rarely
does a buyer purchase more when you drop the price. It's better if
you plan carefully to avoid oversupply.
- Use a receipt book that produces duplicate copies, and always get
someone to sign it when you make a delivery.
- Understand the concepts of mark-up and margin. Mark-up is the amount
the retailer adds to the wholesale price. The margin is what the retailer
is left with after the customer has purchased the product and they
pay the grower. Produce buyers live and die by margins!
- You need to do your homework and know what the going price is for
the product. Visit farmers' markets and produce departments and check
selection and prices. Growers often approach buyers with an idea of
a price in their head - for example, I want to get $1.00 for each
head of lettuce. They are not thinking of what the customer will pay
for it. It's more helpful to find out what the going retail price
is for the product, then work backwards, subtracting a 35-40% margin.
That's the wholesale price you should expect to get.
- Understand the price-commodity relationship. Price is highest when
supply is most limited (and often quality is poorest). The mid-season,
highest quality product will usually get a lower price because supply
is so bountiful. Your sales strategy should include both high gross
profit items in limited quantity and lower gross profit commodities
in huge quantity.
- The first question many produce buyers pose to a farmer is "what
do you want a customer to pay for your product"? You need to have
done some research to find out two things: the prevailing price as
well as the promotional price of your product (how much is it at the
height of the season when there's an oversupply and it's on sale?).
- Retailers require an invoice at delivery. Larger receipts (a half-page
or larger) are preferred because they are less likely to get lost.
Excel has invoice templates that work great.
Miscellaneous
- Read produce magazines like The Packer, Produce Today, Supermarket
Today, etc. to find out what's going on around the country in the
produce industry.
- Visit retail stores (Harris Teeter, Wellspring, etc.) regularly
to see what people are buying.
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This page last updated January
16, 2006.
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