February 2020 - 30

FARM MARKET & AGRITOURISM
Electronic systems help farm market vendors
By Matthew LeRoux
and Todd Schmit
Cornell University
iPads and point of sale systems are
certainly not new, but they are growing in
popularity among farmers' market vendors.
Point of sale systems provide a quick and
easy means for farms to gather customer
transaction data. In turn, this data can be
analyzed to reveal growth opportunities for
market sales.
In the summer of 2018, eight Ithaca,
New York-area vegetable farms participated
in research using point of sale to collect
detailed data on customer spending at
farmers' markets. This article is a highlight of
early findings from the project. Combined,
the eight project farms participated in 16
markets per week. Among all farms and
markets, the project observed just shy of
20,000 customer transactions.
We theorized that studying market
metrics such as customers/hour and
dollars/transaction, would reveal
opportunities to favorably influence average
daily gross sales (ADGS). Beginning in
June 2018, farmers set up the point of
sale system on tablet devices, including
each item they were selling and its price.
A programmed point of sale allows the
farm to " ring up " a customer quickly
and easily and saves the details of each
transaction for export to a spreadsheet. As
a customer's order is rung up, the point of
sale software collects: items in the shopping
cart, price of each, order total, date and
time, and payment method. In addition
to transaction details, we observed the
weather, number of items that farm had
available, and the number of other vendors
at each market.
After a season, the data set was large
enough for analysis. We used farm data to
calculate valuable market metrics including,
customers/market, customers/hour, dollars/
customer transaction, customer item count,
and average item value.
Thus far the project collected sales data
from one season, creating a baseline for
each farm and the aggregate of all farms in
the study. Therefore, we have not tested any
techniques to increase ADGS. We have basic
statistics that serve as useful benchmarks
for farms to compare their own market data
against. Such a comparison informs farms
where they can most benefit from changes.
Below is a summary of observations and
suggested (but untested) techniques which
have the potential to increase sales.
Customer counts: Regardless of market
start time or day of the week, the trend for
Ithaca-area markets was for the highest
customer spending and highest customer
counts to occur in the first hour of the
market. In fact, we observed anecdotally
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Head lettuce, Price/head Units Sold Gross Sales
$2.75
$3.00
$3.50
200
185
158
$550
$555
$553
Table 1: An example of different prices and quantities of sales to reach the same
approximate sales goal. This example illustrates the potential for farms to increase gross
sales by raising prices.
and from recorded transactions that
shoppers are eager to make purchases
before the market's official start time.
Therefore, farms might be able to capture
more sales by being completely ready for
customers before the market's official start
time (when permitted by market rules).
Later in the market, customer spending and
customer counts drop steadily. This suggests
that farms might benefit from trying to
engage late-market shoppers with signage,
samples, and specials.
Market size: There has long been debate
among farmers' market managers and
vendors about whether to limit the number
of vendors selling similar products. While
our research did not directly address this
question it did reveal interesting results.
The markets used by participating farmers
ranged in size from 11-93 total vendors and
four-15 vegetable vendors. When controlling
for all other factors, we found that larger
markets increased customer transaction
size. This seems to indicate that shoppers at
larger markets are prepared to spend more.
However, both customer counts and daily
sales take a hit at larger markets, presumably
because there are more vendors from which
customers may choose.
Item value and package size: At many of
the observed markets, a surprisingly high
proportion of shoppers spent $3 or less with
farms. The average item value across all
transactions in the project was $3.38. The
proportion of customers spending $3 or less
across the 16 markets ranged from 14%45%
with the average at 28%. For farms
seeking to increase customer spending due
to a high proportion of low-spenders, one
potential technique is to pack products into
sizes priced at $3 or higher and eliminate
products priced below $3. For example,
instead of selling garlic for $1.50/head,
farms might try to pack garlic heads in
twos and charge $3. This is not a unit price
increase, just an increase in package size in
order to increase the minimum a customer
will spend with the farm.
Unit price increases: Prices for individual
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products varied among the participating
farms. Of course, an opportunity for farms
to increase customer transaction size might
be to simply raise prices but at the risk of
reduced sales. While our project did not
calculate price elasticities for individual
vegetable crops, we do have some indication
of consumer willingness to pay. Are there
opportunities for farms to increase prices on
best-selling items? Depending on the size of
the price increase, it is possible to lose some
customers (sell fewer units) and still reach
the same sales target. If sales drop, at least it
results in reduced harvesting, washing and
packing which is a labor savings. However,
if sales levels are maintained or drop only
slightly, the farm stands to increase revenue.
Items per customer: The average
customer across all farms and markets
purchased 1.8 items. For farms looking to
increase customer item count, the simplest
approach is to try to influence single-item
customers to purchase a second item. A few
techniques have potential to accomplish
this. One idea is to offer a variety of items in
units that are priced similarly. This would
allow for promotions and signage such as
" Any two items for $7, " and " 3 for $10. "
Farmers in the project also considered
bundling items into an " all this for $20 "
pack. Another idea is to offer more varieties
and sizes of the most popular crops to
incite impulse purchases. A final idea is to
suggest items to customers when they cash
out such as " do you want to get some garlic
to go with these tomatoes? " Anecdotally,
farms report that they are often successful
with well-crafted suggestions.
We continue to work with the results of
this project. This initial article is written to
share some of the early results along with
practical suggestions to benefit farmers
market vendors. We suggest trying out a
point of sale system at market. Programming
the software with all your products and
prices is easy, and entering every sale,
whether cash, credit card or other payment,
is quick. Once enough data is gathered, a
little time spent crunching the numbers
gives a baseline for the operation's sales
metrics. Next, you can test techniques at
market and look for the impacts. Remember,
you CAN improve what you DO measure!
This material is based upon work
supported by the National Institute of
Food and Agriculture, U.S. Department
of Agriculture, through the Northeast
Sustainable Agriculture Research and
Education program under sub-award
number ONE18-316.
Matthew LeRoux is with Cornell
Cooperative Extension. Todd Schmit is with
the Charles H. Dyson School of Applied
Economics and Management, Cornell
University, Ithaca, New York. This article
appeared in " Smart Marketing, " a marketing
newsletter for Extension. It reviews elements
critical to successful marketing in the food
and agricultural industry. FGN

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February 2020

Table of Contents for the Digital Edition of February 2020