Farm retail is probably the most exciting part of food retailing at present. As the ‘big four’ multiples set to work to undercut each other on prices, farm shops, M&S and Waitrose prove that there’s a market for quality products, ethically source with values not only spoken but acted on. Waitrose market share has grown to 5.1%. Competition is strong from the top-end (M&S and Waitrose) and the bottom (discounters Aldi and Lidl continue to grow at 25% and 17% y/y respectively).
There are 5,000 (estimated) farm shops in the UK, and Defra has assessed that half of farms in the UK engage in some kind of diversified activity with farm shops being the most regularly profitable diversified activity.
Some 30% of consumers visit a farm shop at least once a year, and 12% shop at a farm shop at least once a month. Farm shops are seen by consumers as supporting the local economy and ‘local’ has far outpaced ‘organic’ in recent years.
QUESTIONS TO ASK YOURSELF (AND ANSWER) BEFORE YOU START A FARM SHOP
Before starting, consider:
Why do you want to have a farm shop? Are you farming?
Do you have livestock and crops that you could sell direct to the public, given the necessary processing?
If not, what do you plan to sell in the farm shop? Stocking only ‘local foods’ might not be a strong enough Unique Selling Proposition (USP) – but success could be yours with the right mix of products, presentation and honest promotion. Do you have sufficient local suppliers? If you plan to sell your own produce as well as local foods, what processing will you do to add value?
Is your location good for retail? Ideally you’d be on a busy commuter road between two good-sized towns, near schools (for the school run coffee morning and late evening supper dash), maybe even on a bus route. Don’t worry if you’re not, there are many farm shops that break all the ‘location’ rules – but you need to understand what your location means and how to turn it to your advantage. Your location will dictate the type of retailer you will need to be.
Alternatively some farm shops have set up at locations off the farm, in the town or village, because the farm location was considered too remote or other family reasons precluded its use. Be aware of costs: rent and business rates are challenges, plus of course your running costs for produce from the farm.
Are you good at retail yourself? Do you like people? If the answer to these is ‘no’ or not sure, plan how the farm shop will be managed. Putting in a management team adds to costs and uncertainty but is usually necessary for long term growth. (talk to us for guidance about recruitment & management structures)
Do you have family support? Do you need to convince trustees or stakeholders? Opening and running a farm shop is challenging hard work and if your family or stakeholders are not with you on this project it will seem all the more difficult.
HOW MUCH DO YOU WANT TO INVEST?
For some guidance, look at the questions below:
Do you have buildings to convert or are you planning to start with a greenfield site? What will you build with – timber frame, steel frame clad with timber, block and brick – are there conditions about matching existing buildings to consider?
Does the site you’ve earmarked have good road access and space to park cars? Will you have to make changes to the roadways?
How large do you want your venture to be? Manageable with 1-10 people employed or go larger than that? Remember that managing employees can become a full-time job in itself.
Will you have a restaurant/café/food service of some kind? Most farm shops find this aspect becomes very important, the café and farm shop support each other. Adding a café/restaurant reduces losses through waste, and it can build your food reputation when done well.
Depending on what departments you need, on-site production will likely require investment in equipment, such as kitchens, a butchery, a bakery, deli, etc.
Finally, be aware that while your farming business does not pay business rates your retail business certainly will.
HOW CAN WE HELP?
Retail Netwerks is a network of experts specialising in independent food retail and diversified farming businesses. We can help you every step of the way with:
Deciding whether a farm shop is the right investment for you. We can conduct extensive research including customer surveys, traffic & shopper counts, geodemographics, and more to get the essential numbers needed to say whether or not a farm shop will be feasible at your location. We’ll also prepare a 3-year trading model that estimates your sales, trading margins, ROI, and much, much more. Talk to us about our feasibility reports, trading models and research options. We also assist in obtaining planning permission, which itself will affect what you will be allowed to sell and what your investment will need to be.
Making the investment efficiently. You don’t want to be doing things twice when setting up a farm shop - mistakes and setbacks can be very expensive, so get it right first time with our years of experience. We’ll lay out and design your entire site, all the way from planning car parks and roadways down to the detail of which sinks to buy in your kitchen. Every item you’ll need to get up and running can be costed in a CapEx report, so you know exactly how much investment will be required before you even start. The process of designing and laying out is essential because with our help you’ll know if each department is big enough, how many staff you’ll need, and we pride ourselves in making sure the production & back-end of your shop runs as smoothly as possible from day one.
Setting up and getting open. We’ve previously run turnkey operations and our consultants can work closely with you during the build stages to ensure everything’s going to plan while establishing local supply chains, recruiting staff, and putting in systems. Use our experience in the local food sector to find the best suppliers and help make getting to opening day as painless as possible.
Once you’re open we can help with continued strategic planning, reducing your business rates, head hunting farm shop managers, conducting consumer research to ensure you’re on the right track, food safety planning, and offer excellent merchant services for credit/debit cards.
Get in touch today to let us know what you're after - we'd love to hear from you and talk through how we can help!