Saturday, 27 December 2008

Pros and Cons of a Locally Sourced Xmas Dinner

According to a recent report from Farmers Weekly Farmer of the Year John Geldard and Henry Brown of Westley Consulting the local foods market could grow from its current £2.34bn to over £15bn in 10 years.
A growing number of consumers believe that local food is fresher, of better quality, and a good thing because it supports local business. Many, though, think that local food is expensive and difficult to find.
To test the pros and cons of local food shopping we set about making a Christmas Dinner entirely from produce grown and reared within 10 miles of home in mid Warwickshire. Here's what we found.
Sourcing meat was no problem at all. Free range turkey, goose, and duck could be easily purchased direct from the producer's farm. There was a choice of both Limousin and Aberdeen Angus beef, outdoor reared pork, bacon and sausages, and home bred lamb. More intensively reared produce was also available for those choosing that option.
A nearby bakery made their own mince pies and Pudding as well as bread, we bought local Berkswell Cheese, and local free range eggs.
Getting good locally grown vegetables was another story. The local farmer's market was held too early for the veg to still be fresh on Xmas Day, and none of the farm shops sourced from close by. So it was off to the supermarket where nothing was local, but at least the sprouts came from Lincolnshire, the carrots from Notts, and the potatoes from Norfolk. Sadly the mushrooms were Irish, so they had to stay on the shelf.
But what about taste and price? There's no getting away from the fact that these locally sourced products cost more, sometimes alot more, than the supermarket equivalent, and there is a time and hassle factor involved in visiting various different shops. But the quality and taste was far superior. The Kelly Bronze turkey was outstanding as were the bacon and sausages, lamb and Aberdeen Angus beef. The Limousin beef was good too, and certainly better than supermarket beef, even from a premium range. The bakery items and cheese were excellent.
It was a reassuring purchasing experience too, with the ability to talk to the farmers themselves about their rearing methods, and see relaxed stock ambling about in fields or roomy sheds. In a couple of farm shops there was even someone on hand to advise on cuts to choose and how to cook the meat.
To this Christmas cook knowing exactly where the food had come from, and the quality, justified the extra cost and the time involved in sourcing locally.
But this way of shopping is not for everybody. Getting back to the Geldard/Brown report, they reckon that the growth they predict will only happen if local foods are pushed by supermarkets, the mass market catering trade, and the public sector. They are probably right. It would be possible to move local foods from niche to mainstream, and chasing mainstream volumes will suit some producers and growers. The trade off for the farmer is lower margins, and risk of losing control and independence. There would inevitably be a hit to sales in small local stores. And from the consumer's perspective, a very personal and rewarding way of shopping would be lost.
On my shopping travels I asked each producer whether the difficult economy had led to a downturn in business. Most said that sales were holding up fairly well, although there were some signs of consumers trading down, for example from a Kelly Bronze turkey to standard free range,and from steaks and roasts to casseroles and mince. There was also a trend to buying meat to a price rather than a weight.

Thursday, 4 December 2008

Tesco Outgunned by the Competition - Some Reasons Why

So Tesco is getting outgunned by the competition. Third quarter results show their sales up by a miserable 2% compared with Sainsbury up 4.3%, ASDA up 6.9% and Morrisons up 8.1%.

The root cause is customer defection. An analysis by TNS the market research company, shows that in the 12 weeks to November, Tesco lost about £22 million of business to ASDA, a further £10million ALDI and just under £10million to Morrisons . Clearly "every little helps" is not helping enough. Why might this be?

There seem to be three reasons.

First, Tesco has a muddled consumer message compared with competitors. ASDA and Morrisons are known as value supermarkets. ALDI screams rock bottom prices. Sainsbury have stuck with a quality message. Tesco by contrast have responded to the economic downturn by adding a number of discount type products similar to those sold by ALDI and the like, but done little with their main ranges. So in the shopper's mind they are offering neither the cheap prices of an ALDI, or consistent value across everything in store like ASDA and Morrisons. And a slogan like "every little helps" means little to cash strapped consumers keen to hit a budget but reluctant to buy rubbish.

Tesco's prices are too high, and their quality too low. How do we know this? Just read the comments left by shoppers on newspaper articles about Tesco's performance. They tell of huge price hikes, inconsistent prices from week to week, promotions advertised but no product available in store to buy, and inferior fresh products such as bakery and fruit and veg.

And most telling of all, Tesco seems to have forgotten about putting customers first. Customers are outraged at Tesco's arrogant attitude and lack of service.

I'd also add that resentment about the way they treat suppliers is reaching boiling point. At the moment lack of facts means their alleged practices tend not to hit the headlines. This will change if Tesco is demonstrated to cross the line between tough negotiation and outright intimidation, and the publicity will do them little good.

There are lessons for all businesses from the Tesco story.

Successful businesses have a very clear marketing message, and they stick with it. Their actual product offer is often fine tuned, but they do not stray from their basic core principles. And they never, ever, take their customers for granted.

No one would bet against Tesco which is one of the most succesful businesses in Britain. Despite a slowdown in sales they remain almost twice as big as their nearest competitor, and their discount range is turning over about £1billion, which is nearly the same as ALDI's total sales. But they are not invincible, and if they don't learn the lessons then their performance will struggle.