Farm shops serve their local communities and have also gained popularity with tourists wanting to buy locally produced food items. This guide covers the key issues for starting and running your own farm shop.
- Research your target market
- Decide what to sell
- Promote your shop
- Price your products
- Help for farm shop businesses
- Buy and existing business
Research your target market
Establish as best you can whether there is enough local demand for your proposed farm shop. Firstly, see if there are there any existing farm shops nearby and check out the competition. Count these and any other outlets nearby selling similar products that have a similar 'feel' - for example farmers markets and delicatessens. Take into account businesses that are not obviously direct competitors, such as supermarket outlets, local greengrocers, market stalls and convenience stores that also sell fresh produce. Depending on the type of produce you sell, these types of outlet could have almost no impact on the success of your farm shop or they could turn out to be significant competitors.
Consider how many customers your shop needs to attract in order to achieve the turnover you require. Are there enough households locally or will you have to attract customers from further afield? If you are in a tourist area, will you be able to tap into the tourist market during the holiday season?
As well as selling your goods directly to individual customers, you might be able to supply other local businesses. Try contacting local restaurants or hotels - they may be interested in having a regular supply of fresh vegetables, organic produce or local specialities. (For many catering businesses, using locally sourced fresh produce is a strong selling point.)
Some farm shops specialise in a particular type of product (for example, cured meats or special cheeses) and target a nationwide customer base through online sales and mail order. Estimating sales in this case is very difficult - careful marketing will be required and sales may take some time to build up, so it is probably best not to rely on these sales when making your initial estimates.
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Farm shops typically benefit less than other shops from passing trade. As your shop is likely to be at the farm, you probably will not have much choice in terms of location. Nevertheless, the position of the shop on the farm premises is important and you may have a certain amount of flexibility in this.
The shop should be easy to see and find. Providing easy and well marked access will help to encourage any passers-by to stop. Signs should be clear and attractive and parking facilities outside the shop or close by will be helpful.
Competition from other outlets may be less of a factor the further away you are from large towns and cities, but of course the local customer base will be smaller too. This may not be too much of a problem, however, as people are prepared to travel considerable distances to a farm shop if they think the products and service are good enough. Offering local specialities, organic produce, or your own unique products may encourage more customers to make a special trip to your shop.
Research has shown that farm shop customers tend to be from the higher income groups. They are often looking for a helpful and efficient service, good quality food and produce with low 'food miles' which businesses like the multiple supermarkets can't always provide. If your farm shop is in an affluent area, you may find it easy to attract this kind of customer. In less well-off parts of the country, you might have to concentrate on building up sales over a wider area.
Understand your competitors
Make sure that enough customers will choose your shop rather than other food outlets. Your shop is likely to appeal to customers that want to buy particular items to supplement their weekly supermarket shopping, like locally grown vegetables or organic meat. You may also find that it's popular with holidaymakers looking for a 'taste' of the area. So, rather than more mainstream food outlets like supermarkets and grocers, you're likely to be competing with other farm shops in your area as well as shops that are similar to yours in nature, like delicatessens.
Visit as many of these competitors as possible. Have a good look around to see what range of goods they are selling and what kind of image they project. Make a note of:
- the range of goods they offer
- the prices they charge
- whether they sell organic produce
- what their opening hours are
- the type of customer they attract
- whether the premises and fittings are modern and smart
- what level of service they offer
You may find it useful to print out a competitor research form (see below) to record the results of your research.
By carrying out a survey of your main competitors you may be able to identify a gap in the market that your shop can fill - for example, you might find that none of your local competitors stock organic produce. Perhaps you can sell different products not available elsewhere - your own recipe sausages for example, or ready-to-barbeque spare ribs marinated in a special sauce. Specialising like this can distinguish your shop from its competitors and should help to attract customers, especially if you can find a best-seller that your customers then recommend to their friends.
If you cannot identify a clear gap in the market, or an opportunity to specialise, try to attract customers by emphasising the quality of your food. In recent years people have become more concerned about food safety and quality, and even more so in the wake of the various food scandals that have been exposed. Talking to the person who has produced the food or who has played a key role in sourcing it from local suppliers will be very appealing to many people. Providing a welcoming atmosphere and a high level of service is also likely to help you to attract and retain customers.
Find out what people want
Consider carrying out some surveys of the people in your local area, to find out:
- what sort of goods they would like you to stock - fresh fruit and vegetables, fresh meat and meat products, organic produce, frozen goods, flowers, and so on
- whether they would be prepared to travel to your shop
- if they would be interested in regular home deliveries of fresh produce
- whether there are any local greengrocers, hotels or restaurants looking for a source of locally produced food
- what they think of your proposals in general
- what, if anything, they don't like about the existing food outlets in your area
Who are your likely customers?
While your core customer base is likely to be made up of mainly private individuals who live locally, you might also have customers who are:
- taking a day trip or longer holiday in your area. Farm shops are often popular shopping destinations for tourists
- passing through your area, particularly if your shop is situated close to a busy road
- local businesses like restaurants and hotels who buy from you on trade terms
If you sell any niche products and become known as a source of a local speciality, or build up your own range of goods processed on the farm, you could attract customers from further afield. You may consider selling this type of product online or through classified advertisements in a magazine such as Farmers Weekly.
Check out local developments
Check whether there are any plans to build new road systems which mean that local traffic will bypass your farm shop. Also check whether there are any plans to start a farmers' market in your area. Such a market might appear to be a competitor, but you could find that taking a stall leads to extra sales and is a good opportunity to publicise your shop.
Research current trends, plus legal and tax issues
Decide what to sell
If your farm shop is a diversification project from your existing farm, the range of goods you sell may be entirely dictated by what the farm produces. Alternatively, you may decide to buy in a certain amount from local farms or other suppliers to supplement what you produce yourself.
You might sell only fresh goods, or a mixture of frozen, fresh and cooked products. It may be that you decide to sell only organic produce. The range of food you stock might include some or all of the following:
- fresh vegetables
- fresh eggs
- dairy products (cheese, cream, ice cream, yoghurt)
- fresh meat
- meat products (eg sausages, cured hams)
- apples, plums, pears
- soft fruit (strawberries, raspberries, blackcurrants, gooseberries)
- fruit juice
- home-made pies and pasties
- home-made cakes and scones
- home-made jams, preserves, pickles and fudge
Although most of your income is likely to come from the sale of food, you might also consider selling a number of other items. For example:
- bedding plants
- cut flowers
- beeswax candles and polish
- craft items (eg pottery, wicker baskets, chairs)
- cider or wine
- local specialities
- wild bird food
Promote your shop
Creating the right image
It is important that your shop projects the right image. Many customers expect that shopping in a farm shop will be an enjoyable experience and distinctly different from shopping in the High Street or in a supermarket. Farm shop customers typically appreciate the personal contact with people who have been directly involved in the production and/or sourcing of the food, so it is vital that you and your staff are able to answer queries about the goods sold.
First impressions are important, so the design of the shop will ideally make reference to its close agricultural links. The shop building and its setting can do much to create the right image. For example, converted farm buildings which are carefully updated can retain much of their rural character. The inside should be clean and bright, and natural materials such as wood and stone can work well. Any signs used should be easy to read and kept clean.
The layout of the shop and the way the food is presented is also very important. Farmhouse furniture and wicker baskets could be used for displaying goods. Try to keep a spacious feeling inside the shop to encourage people to browse at their own pace. It can be worth engaging the services of a retail specialist to help design your shop layout.
If you're a member of the Farm Retail Association your details will be listed on their online map, which enables people to search for farm shops and farmers’ markets by location.
Advertising your shop
Whatever the characteristics of your shop, you must make sure that your potential customers know about you and the range of goods you offer.
Word of mouth recommendation is very effective, but can be a slow process. You may need to promote your shop by advertising to your potential customers. Press releases to local papers, adverts on local radio, in newspapers and magazines and leaflet drops can all build up awareness of your shop. They do, however, cost money, so you will have to judge whether the potential benefits are worth it. Signs and posters are cheap and can be effective. Taking a stall at a local farmers' market can be a good way of starting to build up a customer base - make sure you provide promotional leaflets on the stall with details of the shop.
Many farm shops have a web page to advertise their businesses and even to sell their products online and this can be particularly effective if you are planning to stock unusual or unique product ranges.
It may help to have additional attractions to encourage people to make a journey to your farm. Perhaps you could set aside an adjoining area as a tearoom, which people could use after shopping. Many farms which have a shop also offer pick-your-own fruit and vegetables when they are in season - this can be a great draw. Other attractions you could consider providing include farm tours, nature trails or perhaps even a 'maize maze' - these have been used to great effect at some farms and generally create a lot of interest.
Price your products
People are likely to visit your shop for reasons of quality and for the experience of shopping in an environment that differs significantly to many other retail outlets, rather than purely price. Farm shops are specialist retailers selling fresh, locally sourced, high quality goods - your customers will know this and will be prepared to pay accordingly.
Nevertheless, it is important that your goods represent value for money and for that reason many farm shops pitch their prices for unprocessed goods like fruit and vegetables at around supermarket levels. Organic produce generally commands a higher price and if you are selling local specialities or home-made products you are also likely to be able to charge more than competitors charge for similar, mass-produced items.
Getting the price right is very important. You must make sure that the difference between the cost price and the selling price is enough to cover all of your operating costs, including your own drawings.
Giving special offers and discounts
You might decide to run occasional special offers. For example, you might offer half-price trial boxes if you run a vegetable box scheme, or give discounts to bulk purchasers such as restaurants. Special offers on pick-your-own fruit can help to bring in extra custom. Many shops also give discounts to staff, regular customers, family and friends. Check out the local opposition for ideas and keep a close eye on any special offers you do make, to be sure that they are working for you. After all, these kinds of promotion might encourage extra sales, but they will also affect the amount of profit you make on each sale.
Help for farm shop businesses
Although there are no training courses available specifically for those working in farm shops, the Farm Retail Association (formerly FARMA) trade body organises training events and provides management support and technical briefings.
Depending on the exact nature of the products you're planning to sell, there may be relevant qualifications available for certain areas of the business, for example training for butchers if you have a raw meat counter or fishmongers if you sell wet fish.
There are also hundreds of general business management and retail training courses available. For example, there are various general vocational qualifications that are relevant to people working in the retailing sector that cover topics such as health and safety, security, stock handling and customer service.
Learndirect is a free service which can advise on training and personnel development. It can provide details of qualifications and skills relevant to your type of business, give you an outline of appropriate training courses and advise where to go for such training in your area. Visit the website or telephone 0800 101 901.
Local colleges will be able to tell you about the training courses that are available in your area.
Buy and existing business
You might decide to buy an existing farm shop rather than start your own venture from scratch. Buying a going concern can mean that the products, customers, regular sales, staff, premises and equipment are already in place.
But buying a business can be a hazardous, expensive process unless you have the right skills and experience on your team, including legal and financial know-how. Establish the genuine trading and financial position, so that the price you pay for the business is not too high.