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
#1
4 Stores in
Wayne &
1 Store in
Washtenaw
County
Wal-Mart
Supercenters
are located in
Jackson &
Adrian
#2
#3
4 Stores in
Ann Arbor &
1 Store in
Ypsilanti
#5
2 Stores in
Wayne County
(Livonia)
Part of A&P group
(11th 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
• 14th 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.
• Mom & Pop grocers
are tied to community
and want to support
the local farmer.
• Chains are using
locally grown as way
to connect to
community.
Photo: www.meijer.com