Just like every other retailer, grocery stores are focusing on the customer experience to get people back in store. Grocery delivery was already a rising trend, and the pandemic kicked it into the next gear. In May, U.S. online grocery sales had grown to 40 percent. So grocers including Kroger and Publix are looking at onsite vertical farms as one way to attract consumers.
"That experience of going into a grocer and picking something essentially off the vine is compelling from a customer experience standpoint," said Shireen Santosham, head of strategic initiatives at Plenty, a vertical farm company based in San Francisco.
According to Grant Vandenbussche, chief category officer at Fifth Season, a robotic vertical farm company based in Pittsburgh, fresh produce is keeping a lot of traditional grocery stores alive. It’s the main category still driving traffic into stores, he said, so innovating and investing in this department has been a focus for most retailers.
On-site container farming is not a new idea for grocery stores, but as urban vertical farming has advanced to become a more mainstream part of the supply chain, the idea is becoming more feasible. Some big players have finished their strategic analysis and pilot programs, and are leaning into vertical farming in a bigger way.
That experience of going into a grocer and picking something essentially off the vine is compelling from a customer experience standpoint.
In two Seattle stores, for example, Kroger installed modular vertical farms from German startup Infarm. While the seedlings spend the first few days at Infarm’s centralized nursery, most of the growing happens on-site at the grocery stores.
In March, Publix’s GreenWise market in Lakeland, Florida, added a 40-foot container hydroponic farm in the parking lot. Customers can see the equivalent of three acres of traditional farmland through the container’s windows. It grows about 720 heads of lettuce each week, all sold in the store. But it’s still early days and the process has kinks to work out. At first, Publix wasn’t getting the yields it was expecting.
"It takes time to grow the product and offer consistent quality, flavor and size," said Curt Epperson, business development director at Publix. "I believe over time, once hydroponic growers refine their processes, and scale-up, we’ll find more efficiencies."
According to Vandenbussche, one of those efficiencies may be a focus on supporting vertical farms at a large-scale grocer’s distribution center instead of at every single retail location. To get significant business and sustainability impacts from vertical farming, companies will need to get large enough to take true advantage of economies of scale.
"We think a lot of retailers are looking at this format if they are going to have high enough volumes of product to start replacing [traditional] grown products inside of all of their stores," Vandenbussche said.
Growing is a hard, finicky business. Retailers are experts at retailing, and it’s hard to be good at both retailing and growing, so expect to see key partnerships materialize. Along with the Infarm and Kroger partnership, Publix’s onsite farm is run and managed by Brick Street Farms.
"Finding systems that are not over-encumbering to their operations, things that they can plug-and-play well, is really going to be critical," Vandenbussche said.
If retailers pursue this model, the customer experience might be more akin to going to a farmers’ market than going straight to the farm. But this model has a better chance of scaling well for businesses while also creating sustainability benefits such as cutting freight emissions, lowering water usage and prolonging shelf life.
The location of Publix's farm has been corrected.