National Farmers Market Week, August 6-12 and the food sector

-- Farmers Market Coalition resource page for National Farmers Market Week

According to the USDA press release:

On Friday, Aug. 11, USDA’s flagship Farmers Market in Washington is hosting several special events on the National Mall at 12th Street and Jefferson from 9 a.m.–2 p.m. and adding a special Night Market from 4 p.m.–8 p.m. Special guests include the Farmers Market Coalition, the official chef of the Washington Capitals Robert Wood, and the U.S. Army Band.

Infographic from the Farmers Market Coalition.

Farmers markets.  I have a past blog entry on reasons why communities create farmers markets here, "The reason(s) why a farmers market is created shapes the type and mix of vendors allowed to sell."

The Neighborhood Notes blog in Portland has a good entry on creating successful farmers markets, "Ingredients of a successful farmers market," which references this market study of farmers markets, Portland Farmers Markets/Direct-Market Economic Analysis: Characteristics of Successful Farmers Markets.

Farmers markets as a retail activation device.  One of the disconnects in a city like DC is that farmers markets are used as a way to "get people to come to our commercial district" as an activation (and placemaking) device, with less interest on the overall functioning of "the food system."

In practice it means that DC has "way too many farmers markets" in terms of them all being able to be successful and thrive, especially on the most popular day--Saturday.   For example, on Saturdays within a couple square miles there are four markets at 14th and U Streets NW, 14th and Park Road (Columbia Heights), Petworth at Georgia Avenue and Upshur Street, and at 14th Street and Colorado Avenue.

Contrast this to Baltimore, which has fewer markets, but each one is much bigger, with greater variety, and less expensive food, compared to DC markets.  But you do have to travel farther to get to those markets.  On the other hand, each market tends to be "much better" than the typical DC farmers market.

Similarly, Salt Lake City only has a couple farmers markets (granted the city is half the population of DC), but the Downtown Farmers Market on Saturday has to be one of the best in the United States, in the top 10--and that means, compared to markets in Southern California, Portland, and New York City.  No farmers market in DC functions at that level. 

"Concentration"--just having a couple markets rather than many dozens makes that possible.

I sit on the board of DC's public market, Eastern Market, and I am constantly amazed at all the new competition that the market continually faces, from new supermarkets to new farmers markets--one just opened up in the Capitol Riverfront district on Sundays, and one is likely to open at The Wharf development in Southwest next year.  And EventsDC, which controls the RFK stadium campus, proposes to create a "food hall," there, less than one mile from Eastern Market.

I noticed that FreshFarm Markets moved its Thursday Penn Quarter Market from a closed block of 8th Street NW to the large sidewalk plaza on F Street in front of the Smithsonian Reynolds Center arts museums, becoming much more central and visible.

Food security.  In the past I wrote that "I wish that DC did more focused food security and food market planning and coordination than it does," although now there is a Food Policy Council in DC.  Interestingly to me, I don't think they've ever reached out to DC's public market, Eastern Market.

Toronto's Food Policy Council is a good model for what can be done in this arena, although many other communities have set up similar food policy councils, following the example of Toronto.

Community Foodworks is a DC nonprofit that is active in this area, running a number of farmers markets, a farm, and outreach activities.  They publish "food access" brochures for many of the city's wards, but they don't seem to be available online.

One of the "problems" in food security planning is that oddly enough, some times it doesn't include supermarkets in the planning.

When Aldi, a "hard discount" store, first opened in DC, I found illuminating one of the quotes in an article from the Washington Post, "Grocery store openings boost underserved communities in D.C. region."

"I’ve been praying that they’d bring a store like Aldi’s or Wal-Mart to this neighborhood because that’s where we spend our money,” Davis said. “The stores where consumers spend most of their money is outside of D.C. This is going to improve everything in the neighborhood.”

City officials said having a branch of Aldi, which is known for low prices, will help meet several needs. 

It made me realize that in planning for a community's retail mix, we don't necessarily aim to cover all price points in a retail category, and that facilitating access to lower cost food--including supermarkets not just farmers markets (although in DC, farmers markets tend to offer high priced food, not low priced food, e.g., a couple weeks ago at the Takoma Farmers Market, granted an organic-focused market, one vendor marked pints of raspberries for $10 each)--ought to be a part of retail planning.

Satisfying multiple market segments with one farmers market.  One problem with organic-food oriented farmers markets is that as a rule the items are expensive, and I personally can't stomach "paying that much for food," when I know I can buy nonorganic items for 1/4 the price--although I happily buy specialty organic items that are unique.

You don't see this at most farmers markets, but a few of the vendors at the Takoma Farmers Market on Sundays sell "seconds" produce at a deep discount.  A couple vendors are the deepest, selling their defective tomatoes, cucumbers, stone fruit, and apples for up to 75% off, while the other vendors might discount items by 33% to 50%.

I buy that defective produce knowing that for some recipes "perfect" ingredients are not required, especially tomatoes for making gazpacho and in recipes where the tomatoes are cut up finely, apples and peaches for pies and other sweets, etc.

In the supermarket world, this type of sales and pricing is called "salvage" ("Salvage Grocery Stores: The Next Big Thing In Food Isn't Even New," Modern Farmer).

Separately, there is a trend of more chain supermarkets selling "ugly produce" at a discount to standard produce, both to reduce food waste and to round out their pricing and segment strategies ("'Ugly' fresh produce gets hipper for grocers, but there's one problem -- supply," CNBC).  Technically, "baby carrots" are produced by grinding down "ugly" carrots, as a way to make sellable produce out of what otherwise would be wasted.

More farmers markets, especially the highest-priced ones, should do this.

Markets as opportunities for nexus on environmental issues.  This year, contracting with Compost Cab, DC has set up food scraps/compost drop off programs at a market in each ward, for example in Ward 1, it's the Columbia Heights market on Saturdays, and in Ward 6, it's at Eastern Market.

(Granted it's something I suggested that DC do for many years, but I shouldn't be too critical that it takes 4-8 years for programs to be initiated, should I?)

Maybe the next step could be pizza box composting at farmers markets.  Most people just toss them into recycle bins, but because they are soiled they aren't recyclable ("wish recycled") and if not diverted, make recyclable paper and cardboard less usable.

Nevertheless, millions of pizza boxes are put in recycle bins
North Carolina State University has created a program to capture pizza boxes in a separate process ("Pizza Box Composting Gets College Try: Campus arms race to go green nets creative efforts to deal with the greasy containers," Wall Street Journal) which is easier for them to do compared to individual households because they can focus on dormitory buildings.  From the article:

College students love pizza. They also love recycling.  But their pizza boxes are virtually unrecyclable, thanks to the cheesy, greasy residue left behind on the cardboard bottoms.  What’s a poor school to do?

At North Carolina State University, the answer is the Pizza Box Composting Project—dumpsters placed at eight locations around campus that since early last year have helped turn approximately 16,000 grease-stained boxes into fertilizer.

(Because I hate tearing up pizza boxes for composting, I prefer that we make pizza from scratch.  The problem is that when the urge for pizza arises, we don't usually have fresh pizza dough ready for cooking.  Yes, I used to just toss pizza boxes into recycling, knowing that the firm that processes DC's recycling has a chipper in their facility for pizza boxes, separate from the recycling stream.)

Trends in the food sector

Food Halls are exploding.  Speaking of "retail activation," food halls, which are a variant of public markets but usually focused on prepared foods, with maybe a bit of selling of fresh food, are exploding as the retail sector declines generally and real estate developers and property managers need to absorb space.

-- "How artisan food halls are transforming malls," JLL Real Views
-- The Successful Integration of Food & Beverage Within Retail Real Estate, International Council of Shopping Centers

Home delivery/meal kits.  Affecting farmers markets is the growing demand for home delivery of food, as well as "meal kits," where preparable meals are purchased--usually delivered, but more and more supermarkets are offering them as well.

I realized that meal kits need to be considered not in terms of being more expensive than buying "fresh food," but in terms of being cheaper than restaurant meals.  So the issue isn't that the average meal is double the cost of fresh food, but $5-$8 cheaper than a restaurant meal, and more gourmet than the average home cooked meal.  Plus now Blue Apron is positioning itself as "farm-to-table."

Hard discounting/Lidl and Aldi.  Lidl is a competitor to Aldi, another "hard discounter," in Germany where both are based, and around the world.  Hard discounters offer mostly private branded goods and generally lower costs on produce--20% to 40% cheaper than traditional markets and generally cheaper than Walmart (although they are aiming to be price competitive at locations where they compete).

Aldi has been active in the US market for a couple decades and is currently expanding ("German grocery chain Aldi expands stores," Fortune Magazine), while Lidl has just entered the market and aims to grow fast. Lidl aims to differentiate by being a bit more "upscale" ("German grocer promises high quality, low prices; US supermarkets take notice," CNBC).

By comparison, the Aldi shopping experience can be grim, but people accept it in return for significant savings.  (I buy produce and certain basic goods at Aldi, but over the years have found that most of their private label "more processed" items don't measure up.)

In the UK, Lidl and Aldi have significantly reshaped the supermarket industry there, putting great pressure on those firms. 

While it is reported that Walmart is responding to Lidl I think that the real issue is over time, Lidl especially will put pressure on traditional supermarkets, which have gone through rounds of shrinkage in the face of waves of competition first from Walmart and then from the larger more successful chains, especially Kroger, which operates nationally, but from superior regionally focused chains too, like HEB in Texas, Giant-Eagle in Pennsylvania, Publix in the South, and Meijer, first in Michigan and now expanding.

Amazon-Whole Foods and supermarkets as a real estate product.  This is more about Amazon purchasing a system that can support its Amazon Fresh grocery service than it is fixing Whole Foods and lowering their cost basis, although their cost basis is likely to be improved as a result of being exposed to Amazon's pricing discipline.  Amazon likely doesn't care about expanding Whole Foods.  They don't need to be "nationwide," just present in those areas that have a preponderance of Amazon Prime members, so they can use the stores to support home delivery of food (along with other Amazon products).

It will put more pressure on supermarkets though, which except for weaker companies (e.g., Marsh Supermarkets in Indiana just went out of business, a wholesaler with stores--Strack & Van Til, just went out of business in Illinois, etc.) tends to be one of the strongest segments of today's declining retail property sector.

While these articles are older, they support the point, although there will be a sorting between stronger and weaker strip centers.

-- "Strip Malls turn heads," Realtor Magazine
-- "Most likely to succeed: Strip centers anchored by grocery stores," Real Estate Journal

This article is new, about a shopping center in Bowie, Maryland:

-- "At Hilltop Plaza, Fortified Property Group And Rappaport Find A Neighborhood Stronghold," Bisnow

For example in Southeastern Virginia, Wegmans and Publix have entered the market and this is leading to consolidation and closures of supermarkets by existing companies.

This sorting will impact strip centers as those with the more competitive supermarkets will do better than those with weaker players.