What has been happening in the farm shop sector?
Farm shops have become increasingly popular in recent years and whilst supermarkets dominate the food sector there are now several thousand farm shops in the UK. One of the main reasons for this is the need for farmers to diversify their offering in order to survive. Farm shops provide an attractive option and grants are often offered to help start one.
Food scares in the late 1990s (BSE) and early 2000s (GM) raised awareness around the quality and safety of food. Since then, the demand for wholesome and organic produce has increased especially as consumers have started to become more conscious of 'food miles' and farm shops are in a position to capitalise upon this and take advantage.
During the recent tougher economic years, farm shops have fared well. Despite products often being found cheaper elsewhere, farm shops have benefitted from tourists especially as over the last few years there has been an increasing number of people who've chosen to holiday at home in the UK.
Getting started
So, having decided to set up a farm shop, what's the best way to start? The first thing is to decide what sort of shop you will run. Will you make use of a redundant farm building, sell your own produce or locally produced goods, sell non-food items, try trading at a local farmers' market or purchase an existing farm shop. The route chosen will naturally affect the costs.
When it comes to cash flow, you will need to estimate how much income you will receive. Always work with caution as you cannot accurately predict how much you will sell, and remember to include VAT in all calculations. When making an estimate consider the type of business you're running including who you will be selling to and factors including opening hours, your products, what goods you will stock and then of course the pricing and how you'll be able to cover costs and overheads.
Market research
To help work out your predictions, it is important to assess the demand for your farm shop in the area. Check out the competition but remember to include outlets that sell similar products even if they're not farm shops. Even supermarkets, which might not seem a direct competitor, must be factored into the equation as they sell fresh produce.
From this you'll be able consider if there are enough houses locally for a farm shop to succeed, if customers might come from further afield and whether there is a tourist market. Are there local hotels or restaurants that your new farm shop could supply fresh produce to regularly?
Location is also something to consider. Whilst there isn't always that much choice for a farm shop, the position on the farm site itself is important. The shop needs to be easy to see and find with clear and helpful signs. Parking facilities will also be very helpful. Farm shop customers are usually from higher income groups so it is important that your business has helpful and efficient service with good quality food and produce.
Research into future developments is also important. Check whether there are any new road systems being planned, if there's a farmers' market coming to the area and if there are any plans for a new supermarket close by.
Promoting the shop
Creating the right image is important to the success of the farm shop. High quality, friendly and helpful advice in a relaxed atmosphere should make for an enjoyable customer experience and something that is different from regular high-street shopping. Personal contact is important and having staff that are knowledgeable about the products could become a unique asset.
An attractive shop creates a good first impression but the layout and presentation of the produce is also something that must be right. A spacious feeling with traditional farmhouse furniture gives an authentic impression and the National Farmers' Retail and Markets Association (FARMA) has a range of banners, signs and carrier bags which can be printed to include your own farm shop label.
Advertising your shop helps to make sure that potential customers hear about you. Word of mouth is effective but is a slow process. Adverts in local papers and on local radio stations along with leaflet drops can help increase awareness of the shop quickly. All these tactics do cost money so it is about working out which deliver the best returns. Taking a stall at a local farmers' market is a good way of promoting the shop. It can build a customer base whilst also helping to sell produce during the day.
Having additional attractions, such as a tea room or the option to pick-your-own fruit and vegetables, creates an experience and extra reasons for customers to come and visit and then return again.
Sector development
Keeping up to date with the farm shop sector will improve the chances of success for your farm shop. FARMA represents the interests of all UK farm shops. They have a journal sent to members three times a year and a weekly e-newsletter. They run a certification scheme that offers benefits including training and a consultancy service to help shops develop. You can also have your farm shop listed on the FARMA directory and linked to from their website.
To summarise
Creating a customer experience, offering high quality produce and standing out from competitors are three of the essential things to have in place before considering opening a farm shop. From this base it is possible to create a successful business and capitalise on a market that has held firm during the tougher times.
Click here to download the full sector guide.
Content provided by Santander
