• by Sarah Mahoney  @mahoney_sarah, June 15, 2009

While supermarkets have been urging customers to think greener by buying local produce for years, in a sign of the times, Safeway says it is launching a new initiative that also promotes locally grown produce as a way to boost California's sputtering economy. What's more, in order to do so, the Pleasanton, Calif.-based grocery giant is taking a swipe at fast-growing farmer's markets.

"Nearly a third of Safeway's produce comes from local sources. In California, that number is even greater, roughly 45%," the company says in its release. "This new initiative will direct our customers to our extensive selection of premium-quality, locally grown produce at competitive prices," it adds, and "means that shoppers can find more local produce than at a typical farmer's market."

"For the most part, announcements like these are designed just for the press release," says David J. Livingston, a supermarket consultant based in Waukesha, Wis., as supermarkets -- which are losing share to such channels as supercenters, discounters, warehouses, and dollar stores -- struggle to find new ways to get consumers' attention.

"But besides creating a little buzz, there's a practical note -- they are lessening the miles between the product and the store. If they can sell the same product without having to transport it across the country, maybe they can make a little more money."

While farmer's markets sell only a small amount of food each year -- about $1 billion in annual sales, estimates the U.S Department of Agriculture, versus $44 billion for Safeway -- they are growing faster than radishes. Between 2000 and 2005, the latest year for which statistics are available, the number of farmer's markets jumped 43% to 4,093, an average growth rate of 8.6%.

The government's research shows that people are flocking to seasonal markets primarily for freshness and variety, but also because they want to support local growers and more sustainable food practices. And in the 1997-2007 period, the growth of direct-to-consumer food marketing across all regions far exceeded the growth of total agricultural sales, the government reports, "up 104.7% in the U.S., while total agricultural sales increased by only 47.6%.

But farmer's markets aren't cheap, Livingston points out, and Safeway is betting that with gas prices rising, consumers will appreciate supporting local farmers without having to make an extra trip.

Safeway says its in-store campaign will feature a range of material, including "locally grown" maps that will show the location of key local farmers, "as well as point-of-sale material that will tell the story of Safeway's local farmers."

While many chains, including Walmart and Whole Foods Markets, use similar strategies, Safeway -- based in the heart of California's extensive agricultural assets, and with a strong concentration of stores in the West -- has an advantage. The company says agriculture accounts for 1.1 million jobs and more than $60 billion in personal income in California.