False competition in loss leaders.

The loss leader game isn’t meant to be played by people growing exceptional produce at small scale. Let’s take a look at loss leaders and the false market place they create.

A few months ago when we were making State of the Soil; Season 1 I learned a valuable lesson. I gave solid advice for a farmer who was wondering about what he should grow for his market. I showed him how to find his market share and demographics of potential clients in the town he lived in.

I learned that day that if someone doesn’t specifically ask for help, no matter how good the advice or how much I believed they needed/wanted it the advice would fall on deaf ears and even resented. I rarely talk out of turn these days unless it’s in a group or forum I run or group I’m asked to talk to.

But sometimes & bite my tongue & keep my fingers off of the keyboard.

The other day in a market farmers group, I saw a post with a picture of a grocery store ad and the narrative was “how are small farms supposed to compete with this?”. Which quickly led to “this is why people won’t pay retail at the farmer’s market.” I don’t recall being so sad for someone in a long time. This person’s idea of competition was an entity playing a different game.

What a loss leader is.

A loss leader is a marketing tactic where a store (think grocery, discount chain, big box lumber yard) sells a commodity product for less than the cost to drive traffic to the store to buy higher margin companion products.

Examples:

Grocery: produce (high perishable) paired with salad dressings, meats, convenience paper goods.

Discount Chain: (endcap items and specials to get you into a place you can buy anything from grocery items to underwear. They will make a profit within the entire transaction.

Big box lumber yard: This I know well as in a previous life I had a tenure at one of these. Drywall, 2×4’s, plywood, concrete, pickets, posts, OSB, were hardly ever sold at cost. Sometimes for much less because paint and hardware’s margins alone can carry the stores’ profit.

Loss leaders are not true representations of a product’s value. Loss leaders are not a measuring stick to judge hand seeded, grown, and harvested perfection. Your clients know the difference in your product vs. watered down commodity goods. Do not insult your client by playing the loss leader game. Deliver the best produce you can and do your clients the service of charging enough to stay in business. They do not want you to go away.

To think, as a market farmer you can play that kind of strategy out is reckless and a waste of brainpower. I’m admitting I got pissed when I continued to read the comments.In the community at State of the Soil, we have built a network of people who offer solutions, not banter back and fourth with self-pity.

A grocery store is not competition if you groom your clients to understand they deserve better agricultural products. Your clients support you because you give them transparency, not for 10 for a $1 empty calories. The $1 iceberg lettuce buyer is not your client. The person who wakes up early each Saturday morning, who plans their meals out in advance around the market’s offerings is your client. Take care of them, and you have made a connection more valuable than anything a chain store could ever offer.  People trust you; not the person stores are paying minimum wage to not give a damn about your families food origins.

Chains have their customers. Market farmers have their clients. Do not think a loss leader devalues your offerings. If anything, be thankful people who think haggling price have a place to buy sub-par produce with their white bread, and sugar laden microwave meals. You will have one less person that will stick their nose up at your prices to deal with.