Case Study Analysis of Marketing Potential for Local Producer to Independent Grocer in Jackson, Lenawee, Monroe, Washtenaw and Wayne Counties

History of Grocery Retailers 1859 – The Great Atlantic & Pacific Tea Company is founded (Retailer Farmer Jack is now part of this company) 1870 – SUPERVALU (now owner of Save-A-Lot) began as a wholesaler serving the Minneapolis/St. Paul area 1883 – Barney Kroger opened the first Kroger Co. store in Cincinnati, Ohio 1918 – Independent Grocers formed Cooperative Wholesale Grocery Company (Now Spartan Stores) 1926 – Independent Grocers Alliance (IGA) established to increase buying power 1934 – Hendrick Meijer opened first store in Greenville, MI

Four of the five top grocery retailers operate stores in the five counties Wal-Mart Supercenters are located in Jackson & Adrian #1 #3 #2 #5 4 Stores in Wayne & 1 Store in Washtenaw County 2 Stores in Wayne County (Livonia) 4 Stores in Ann Arbor & 1 Store in Ypsilanti

Part of A&P group (11 th largest grocery chain in US) - all stores are located in Metro Detroit area -2 stores in the city of Detroit ~ 18 stores in Wayne County -2 stores in Monroe County

14 th largest grocer Meijer visits farms in each of 5 states to ensure quality, food safety, packaging & cooling techniques. Reviews what worked & what didn’t with farmer to plan for upcoming year.

Advantage of Cooperatives Ex: IGA & Spartan Stores Independent grocer enjoys same purchasing power as chain retailers Cooperatives offer advertising guidance, and placement – reduces costs for independent grocer Technical support available

Grocer Classifications Chains – companies with many stores and influential purchasing power. Independent Grocer – owner of one or two stores, affiliated with a cooperative group to lower purchasing costs. Mom & Pop Shops – owner of one or two stores without cooperative affiliation

For this study… Spoke with Small Chain Grocer – Polly’s Country Market (Stores in Jackson, Lenawee and Washtenaw Co.) Independent Grocers with Cooperative Affiliation – Franks Shop-Rite (Jackson Co.) & Interlakes Market (Lenawee Co.) Independent Grocers without Cooperative Affiliation (Mom & Pop Shops)– Shannon’s Market (Jackson Co.), The Springs (Lenawee Co.), Danny’s Fine Foods (Monroe Co.), Anand Bazaar (Wayne Co.) & Andy’s Market (Wayne Co.)

Findings… Small Chain Does one ad for all stores, needs to be able to have enough product to fill all 12 stores Purchases produce at Eastern Market and requests Michigan grown products from suppliers - ultimately buys lowest priced item Buys chicken and lamb from Jackson Co. & Lenawee Co. Fair each year. Unable to compete with Meijer on price of Beef.

Findings…Independent Grocer with Cooperative Affiliation Co-op allows grocer to get lower price on goods (compete with chain) Penalized if delivery truck is not full – typically get delivery 2x per week (have to pay for entire truck regardless) Co-op compiles & prints ad with store name on it – store saves lots of $$$ Those grocers who are affiliated with co-op are making money and doing well

Findings…Mom & Pop Shops Most likely to purchase from local farmer (4 out of 5 interviewed are or would like to) Believe buying from local farmers provides competitive advantage Very committed to neighborhood & community

Barriers in Farm to Grocer Relationship Communities where residents receive state assistance for food, grocers cannot stock fresh produce & meat because it is not purchased (spoils)

Barriers in Farm to Grocer Relationship Even companies who are buying locally may have high employee turnover. New Buyer may not be aware of, or care how well local product is doing & cut product from purchase list. Chains and Co-ops have reduced purchasing price because of buying power. It will be difficult for small to medium farmers to enter this market.

Opportunity Increase fuel charges may force grocers to source locally. Chains are using locally grown as way to connect to community. Mom & Pop grocers are tied to community and want to support the local farmer. Photo: