9th International Public Markets Conference - Larrry Lund

LARRY LUND

Market Trends: How New and Old Public Markets Stay

Relevant in Today’s Competitive Marketplace

PrincipalReal Estate Planning Group

PUBLIC MARKETFOOD TRENDS

Larry Lund

Principal, Real Estate Planning Group

Chicago

312-751-1250

[email protected]

Convergence in global food demand and delivery-

“Convergence is apparent in most important food expenditure categories and in indicators of food system modernization such as supermarket and fast-food sales”– U.S. Economic Research Report, 2008

Emerging Trends in FoodA

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les

Source: REPG search of Google Scholar by terms in specific years March, 2015

Going out to eat is likely to keep increasing

%43.2%

20.1%

35.8%

1961 1990 2013

Global move to ready meals

Source: USDA Economic Research

Sales at U.S. food service places ready to surpass grocery stores

Source: U.S. Census Monthly Retail Sales and Food Service Report, March 12, 2015

1992 2015

Farmers Markets fastest growing food distribution channel

Po

pu

lati

on

Source: U.S. Census 2012, USDA-AMS-Marketing Service Division, and REPG

Food service segments shares remain constant

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

1997 to 2013 Other – 2.3%Recreation – 4.1%Stores/Bars – 4.5%Institutions – 7.2%

Full-service Restaurants

Limited Service Restaurants

40.9% Share

37.0%Share

36.1% Share

41.3% Share

Total 77.4% Share Total 77.9% Share

Big Changes in Food athome buying

63.3% Share73.9% Share

1997:Farm, Wholesale 6.4%Home Del./mail 3.8%Other Retail 4.6%Mass Merchants 1.7%Warehouse 3.4%Specialty Food 2.2%Other Grocery 1.2%Conv. Stores 2.7%

2013:Farm, Wholesale 5.9%Home Del./Mail 2.9%Other Retail 4.8%Mass Merchants .5%Clubs & Super Ctr. 16.3%Specialty Food 2.6%Other Grocery 1.1%Convenience Stores 2.7%

Food Hubs

• Aggregation, distribution, and marketing of source identified products to size-appropriate infrastructure

• Mostly sell to Restaurants, CSAs (Community Supported Agriculture), and their own retail storefronts

• 75% are located in Metro Counties, half are in counties > 1 million people.

• Less than 10% Hubs (2013) require GAP (Good Agricultural Practices) or GHP (Good Handling Practice) certifications.

• Less than 5% have sales over $10 million vs. Average produce wholesaler $15.2 million. Only half of Foods Hubs are economically viable.

Source: Wallace Center, 2013 National Food Hub Survey

Merchant wholesalers consolidating to increase efficiency

$,000

Source: U.S. Economic Census, 2012

U.S. changing demographics change food spending

• Average household size declined from 2.63 (1990) to 2.54 (2013)

• Nonfamily Households increased from 29.3% (1990) to 33.9% (2013)

• Little planned eating

• But more restaurants and prepared food to take home.

• What does a Public Market look like that meets this customer’s needs?

Locavore Movement & Globalization

What’s Local?

• Oxford American Dictionary -250 miles

• Whole Foods 7-hr drive

• U.S. Congress <400 miles

• State of Vermont 30 miles

• Boston Public Market – State.

Why Local

• Freshness 82%

• Support Local Economy 75%

• Knowing Source 58%

Source: USDA Economic Research Service

Globalization15 multi-national companies

control 30% of supermarket sales

What is the role of today’s market is it a place to buy food, eat, or hybrid?

West Side Market Hall, Cleveland West Side Market, Cleveland Produce Arcade

Eataly, Roma, NYC, Chicago, San Francisco, TokyoHarrods Food Hall, London

Granddaddy and Newest Entrant into Food Halls

Grocery stores want to be restaurants

Whole Foods Market –Wine Bar Mariano’s Market – Oyster Bar

Mercado de San Anton 4 levels- Madrid

Customers will shape market

French Market, Chicago

You do not get to select your customers, your customers choose you!

Milwaukee Public Market

Questions you need to ask

• Why do you want to develop a “public market”?

• Who are your customers? Markets have two Customers!

• What do your customers want?

• How will the Market be economically sustainable?