Grown Close, Sold Close - Unveiling the ups and downs of local sourcing in British supermarkets

Businesses globally have adeptly embraced the challenges posed by the new normal in an ever-evolving consumer landscape. In their relentless pursuit to safeguard and strengthen their operations, industrial firms are leaving no avenue unexplored. Amidst this transformative shift, an intriguing trend has emerged — businesses once drawn to outsourcing their needs abroad are now seeking more affordable alternatives closer to home. Procurement experts, in particular, are increasingly inclined to source products locally, marking a significant paradigm shift in the business world.

One industry contending with the impact of this change is the grocery sector, where an increasing number of stores are finding it arduous to keep pace with the surging preference for locally sourced products. While the growing demand for goods produced within the community seems like a compelling reason for supermarkets to adapt, there are a host of other factors at play, which we will delve into shortly.

The allure of knowing the origin and provenance of goods is undeniable. Yet, it is crucial to note that provenance alone does not necessarily indicate that a product was made in the immediate vicinity. For instance, one can savour Hereford beef in London or indulge in Cornish clotted cream in Scotland. Provenance, which is the beginning of something's existence, though valuable, is somewhat one-dimensional as it merely conveys the physical location of production, neglecting the broader economic, environmental, and societal advantages associated with local goods.

Driven by the challenges posed by the global supply chain, an increasing number of individuals are now turning to local providers as a viable alternative. The far-reaching impact of the ongoing disruptions in the global supply chain, primarily triggered by the pandemic, has left businesses of all types reeling. Factory production and port operations faced significant disruptions due to the pandemic and subsequent lockdowns, resulting in labour shortages and logistical bottlenecks.

While some industries can weather the storm by sourcing their products locally, larger companies heavily reliant on global supplies face a more daunting task. Nevertheless, the benefits and challenges of grocery stores embracing local sourcing are ripe for exploration, illuminating a path that could reshape the industry.

By understanding the intricacies of this transformative trend, we can gain valuable insights into the future of grocery shopping and the evolving relationship between businesses and their local communities.

What does local sourcing mean?

Step into any supermarket or restaurant, and you'll encounter the term "local" adorning various food products. Yet, defining what exactly constitutes a "local" item remains an enigma, with no universally accepted definition. While some retailers may argue that vegetables grown within a 100-mile radius meet the criterion, others might insist that true locality is confined to a mere 10-mile radius.

At its core, local sourcing is a practice that revolves around procuring supplies or goods from domestic or regional producers. Rather than seeking materials from abroad, businesses opt to purchase from local sources. In comparison to international sourcing, local procurement often comes at a higher cost. However, for many, the convenience and expediency it offers outweigh the financial implications. Nonetheless, the term "local" can encompass a city, county, state, or even an entire country like the United Kingdom, leaving room for interpretation. Regardless of one's personal definition, the prevailing belief is that the closer the journey from farm to plate, the better.

Embracing local providers proves to be a prudent choice, especially when demand is on the rise. The reliance on local vendors ensures a steady supply of goods needed for manufacturing within a specific timeframe, mitigating the risks associated with uncertain international sourcing.

The complexity of local sourcing, however, goes beyond simple proximity. It is a complex idea that integrates economic, social, and environmental aspects to create a mutually beneficial relationship between enterprises and the communities where they operate. Businesses that source locally promote regional economic development, aiding small-scale producers and fostering the creation of jobs. Additionally, the smaller carbon footprint brought on by closer travel times is consistent with the increased cultural emphasis on sustainability.

Local sourcing does not, however, come without difficulties. Larger businesses encounter logistical challenges when attempting to localise their supply chains, despite the fact that it may appear like an appealing idea for small businesses or those operating in close-knit communities. It requires careful planning and cooperation with local partners to scale operations while keeping a consistent supply and competitive price.

It soon becomes clear that there is no one definition for the term "local," despite efforts to do so. It crosses geographical boundaries and combines different viewpoints and ideals. Each interpretation adds to the tapestry of what local really means, from farm-fresh vegetables farmed close to artisanal treats made with great care in neighbouring communities.

Benefits of sourcing locally

Supply chain woes dominate headlines, and navigating the transformed reality left in the wake of the pandemic demands meticulous planning. Amidst this turbulence, the dependability of local sourcing emerges as its most remarkable advantage. When your cargo travels a shorter distance, the potential for complications diminishes significantly. No longer do businesses have to fret about airports shutting down or ports leaving your precious cargo stranded. With enhanced reliability, managing the risks of high-profit scenarios becomes far simpler.

For grocery stores, local sourcing has evolved into a formidable sales strategy, with a growing portion of their revenue stemming from locally produced goods. While customers may appreciate the notion of supporting regional vendors, the price differential often plays a decisive role. In the current landscape, cost-effective local sourcing has become more critical than ever.

The benefits of local sourcing are manifold, according to Business Reports. Speedier and more dependable deliveries, exemption from import duties, enhanced flexibility, greater control, and potentially lower logistical expenses all contribute to its allure. Startup Sloth emphasises that partnering with local suppliers offers a unique opportunity for grocers to establish personal connections. Unlike distant suppliers, local providers can be met and known on a deeper level. By fostering trust in these relationships, businesses can make long-term investments that might be otherwise challenging with suppliers located afar.

While suppliers may claim to treat all customers and purchase orders equally, the truth is that those expecting a site visit or a drop-in meeting tend to be top of mind. Face-to-face interactions allow supermarkets to address concerns, ensure product quality meets their standards, and reduce the risk of miscommunication that can lead to inaccuracies. The closer grocers are to their supply chain elements, the greater their control over them.

As demand surges, Thomasnet.com, a product sourcing and supplier discovery platform, highlights the safety inherent in relying on local providers. Local suppliers possess the ability to deliver the required products within specific timeframes, making them an excellent choice for supermarket production. Furthermore, this approach can boost revenue and help save money by impressing businesses in the local area with a tight and efficient supply chain. Thomasnet advises businesses to showcase their dedication to local suppliers in marketing and sales activities, amplifying their appeal to prospective clients.

The merits of local sourcing extend beyond profitability and convenience; they extend to environmental stewardship. Thomasnet notes that reducing shipping distances and storage lower emissions and energy consumption. By promoting environmentally friendly production, grocers not only win over eco-conscious customers but also benefit from heightened brand recognition and a loyal clientele.

According to a survey by Oden's State of Manufacturing, 11 per cent of manufacturers made particular, localised modifications, while more than half of manufacturers made changes to their supply networks, according to Forbes. To make supply chains more local, 45 per cent of manufacturers indicated they were re-shoring or near-shoring.

Additionally, Planergy, a SaaS-based spend management system, disclosed another merit to local sourcing. The firm said opportunities and difficulties might strike alone at any time and before selecting a vendor for a purchase, buyers like to know the growth pattern for the goods they are purchasing. Scalability, according to Planergy, is important. Lead times are shortened because local suppliers are typically more responsive than suppliers located further away. They can deliver goods more quickly. Suppliers find it simpler to plan shipments locally than internationally.

Planergy also noted that every delivery or truckload of supplies you receive has an environmental impact. Your suppliers' products don't have to travel as far to reach you when you buy them from them. As a result, you use less energy and receive what you need more quickly. Emission reductions also increase sustainability. Beyond the fuel and shipping costs, it also aids in reducing storage, which lowers overall energy consumption.

Since the start of the pandemic, Aldi, a leading supermarket chain, exemplifies this shift. Since the pandemic's onset, Aldi has invested an additional £1.6 billion in British suppliers, including £125 million towards local meat, poultry, and dairy farmers. Their commitment extends further, as they aim to increase purchases from regional vendors by £3.5 billion annually by the end of 2025. This unwavering dedication has facilitated their growth, making Aldi the fastest-growing supermarket in Britain in 2021. Aldi reiterated this commitment in January 2022 and declared that it was assisting the expansion of hundreds of small British firms.

Giles Hurley, CEO of Aldi UK, attests to the power of collaboration with British suppliers. By working closely with hundreds of local vendors over an extended period, they have achieved remarkable success. Hurley reaffirms their commitment to sourcing nearly all grocery products from British suppliers as they continue to expand and open new stores throughout the nation.

As the grocery landscape undergoes a profound transformation, local sourcing emerges as a force to be reckoned with. It fosters closer ties with local communities while providing dependability, efficiency, closeness, and environmental advantages. Businesses that take advantage of local sourcing have the opportunity to safeguard their supply chains as well as create a sustainable future that appeals to both customers and the environment.

Limitations of local sourcing

Despite its advantages, local sourcing has drawbacks that may prevent it from being practical or acceptable in many circumstances.

According to Startup Sloth, one drawback of local sourcing is the possibility that not all required items would be accessible locally. Due to the scarcity of companies that can match businesses' requirements, one might be compelled to employ providers who are located further away.

Suppliers that are more affordable or specialised may be farther away, Startup Sloth revealed, saying there may be occasions where more distant providers are employed even while local vendors are readily available. This could be due to the higher quality or lower prices of the goods offered by suppliers who are located further away, the company added.

Another disadvantage, according to Global Trade Magazine, is that the neighbourhood supplier can become overly dependent on a business. Overdependence, the magazine said, is bad for both the supplier and the firm, though. A supplier's ability to compete in the market may be adversely harmed if they begin to put the needs of the business on top of their own. They risk becoming too specialised to expand their firm, and getting new contracts can be difficult. Another issue is the slowdown or cessation of their new product development. They risk eventually being left behind and losing their main source of support. Planning to expand to additional products would make it challenging for customers to predict demand.

A business might not be able to get top-notch products from local vendors. Yes, they are probably trustworthy and reliable manufacturers. However, since the entire globe is the business' target audience market, it's always feasible to find someone making an improved version of the thing you're interested in.

Alibaba.com revealed that close ties to regional suppliers may cause problems in selecting ethical vendors; a local supplier's agreement could be terminated, which could result in unfavourable local publicity.

It's also possible, according to Alibaba, that businesses won't be able to find high-quality goods in their own country. The country's economic situation may have an impact on supply and delivery chains.

In response to the recent changing challenges of consumer demands and the global supply chain, businesses have embraced the concept of local sourcing. The grocery sector, in particular, has experienced a rapid increase in the inclination for locally sourced products. Local sourcing not only offers the advantage of knowing the origin of goods but also encompasses economic, environmental, and societal benefits.

However, over-dependence on a local supplier can also be detrimental to both the supplier and the business, hindering their ability to compete and innovate. Additionally, businesses may struggle to find top-notch products from local vendors if the global market offers superior alternatives.