Local Products Driving Shopping Behavior Shift

TORONTO — With the spring “buy local” under retailers’ belts and autumn products about to hit shelves, a survey by Precima shows 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 behavior and then structure their pricing, merchandising and promotions to align with the value consumers place on local products," says Graeme McVie, General Manager and Vice President of Business Development for Precima, the data analytics division of LoyaltyOne.

Other key findings from the Precima survey include:

• A majority of people choose local to support the local economy/local business (37%), followed by local products are better made.
• Most shoppers want to see local products alongside regular products (42%) vs 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, $700+/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.

A correlation was also found when it comes to the premium shoppers are willing to pay.