A thriving independent grocery segment continues to attract Motor City consumers.

Originally printed in the November 2022 issue of Produce Business.

The produce business in Detroit has strong foundations and one of them is the Eastern Market, a Motor City institution founded in 1841 and continuing in operation at the same location since 1891.

The farmers market operates on Saturday all year-round as well as on Sunday and Tuesday from May to September. It also has a wholesale component open from April to November. Besides food sales, the market also hosts events and a variety of participants that range from musicians to street artists to artisan jewelry makers.

“The market has evolved a lot in the past few years, with many developments tied to the effects of the pandemic,” says Sam Morykwas, senior marketing manager, Eastern Market Partnership, Detroit. Morykwas makes a point that, although an institution, the Eastern Market also is a dynamic operation evolving with the city.

“We have distributed over 70,000 produce boxes to communities around Detroit, we have launched an online ordering platform with curbside pickup, we have significantly reduced the usage of single-use plastics in the market, and we have opened a food accelerator space — all in the past few years. The best way to describe our community work is that we’re constantly working to identify issues in Detroit’s food sector and create solutions to meet those needs as they arise.”

Still, Eastern Market’s core — produce — remains to support the rest of the operation. “Produce is the most consistent, central offering of the market year-round,” he says.

Eastern Market gathers an array of independent businesses to draw a crowd and to give consumers choice in what amounts to a fairly festive environment. The market is home to 500-plus small businesses, between vendors and retail shops in the market district.

“Independent retailers are at the heart of what we do,” Morykwas says. “Without these businesses, there is no Eastern Market, and the opposite is true as well.”

Like restaurants and conventional food retailers, the Eastern Market has had to cope with the difficulties the pandemic has wrought, and now inflation.

“Both of these concerns have been top of mind for us as of late,” Morykwas says. “The market sees around 2 million visitors every year, and we know we have a responsibility to these guests to bring them safe shopping, fair prices and accessibility to local, healthy food. Many of our vendors have had to make adjustments to their prices, their sampling practices, their production lines and much more, in relation to COVID-19 and inflation.”

As a community institution, it promotes produce in part by providing a view to healthy foods and activities, with most of its wellness efforts based around the Tuesday market, Morykwas says. “That market shares a similar vendor mix to our flagship Saturday market, but we have free fitness classes and free community/health resources.”

Eastern Market also is a place where trends emerge, and, lately, it has provided local produce aficionados a welcoming environment to shop. In addition, the market is “seeing growing interest in plant-based proteins, says Brandon Seng, director of food business development, Eastern Market Partnership, and is working to build that segment regionally. “We are currently working with a falafel manufacturer and network of bean growers to go to market with natural, known ingredients, which we believe is a trend that will continue.”

The Eastern Market benefits from the range of Michigan produce available, and it has a wholesale element as well as retail.

“Nationally, Michigan produces the second most diverse crop mix in the nation,” says Seng. “With Detroit being our state’s most populated city, we have the opportunity and responsibility in sharing this bounty. The Eastern Market has long been a place where wholesale buyers/independent grocers source this diverse offering of specialty crops. The fact that a buyer can coordinate the purchase of a vast array of produce in one central location is what makes our wholesale market unique. In season, this market operates between midnight and 6 am, and buyers can walk the floor and choose specific produce for their market or outlet. This level of access is something we’re incredibly proud of.”

Seng points out that interest in local produce and understanding where food originates is a growing trend in Detroit.

“We believe that transparency in the food chain is critically important for our customers, and something that is becoming a bigger competitive advantage for our growers,” he says. “Organic sales show to be softening a bit, and customers are becoming more likely to ask where a product is from or which farmer produced it. This interest in regionally produced and source-identified produce seems to be getting stronger.”

Argus Farm Stop, with three locations in the Detroit suburb of Ann Arbor, MI, offers local food seven days a week and works on consignment, so farmers own the produce, set the price and keep 70% of the sale. The Argus operation is focused on promoting the region’s fruits and the vegetables, so it isn’t the place to buy bananas.

The produce-focused, locally oriented stores are serving consumers who want to explore products with origins in Michigan or the immediately surrounding region and “who are becoming extremely passionate about what they can get,” says Dani Cavagnaro, Argus produce manager. “If you can’t get a banana you want, we just finished up with pawpaw season, and people are becoming interested in pawpaws. They taste very tropical ,but they are native and they are really sustainable. It’s an opportunity for when people come in looking for a certain thing, we can redirect and show them something new.”

Argus not only sells through the stores themselves, but also offers produce boxes, delivery and, at one store, pickup to make eating local convenient.

At Argus, produce “is the main event,” Cavagnaro says, so even if the store also includes limited everyday grocery items, a little locally butchered meat and some products from nearby artisans, “70% to 80% of our time and attention and effort is to produce.”

WHOLESALE SCENE

The macro environment has made things tough, including for wholesalers on the Detroit Terminal Market, first with COVID-19 then with labor shortages, fuel prices and inflation. Still, says Jordan Grainger, vice president of sales and business development, Ben B. Schwartz & Sons, Detroit, the Motor City has some important factors supporting the produce industry.

“Detroit is unique with the support from the local independent grocery stores that shop the market,” Grainger says. “Michigan has a strong presence of independent grocery stores that are supported by the communities. These stores pride themselves on quality, which aligns perfectly with Ben B.’s values.”

Independents help define a market, given each indy grocery is focused on a particular neighborhood and its unique population.

“Independent retailers are an asset to any market; they can react quickly and take advantage of daily opportunities,” says Dominic Riggio, president, Riggio Distribution. “Independents give wholesalers and their suppliers the opportunity to get new products to market quickly and efficiently. Independents can capitalize on trends seen on cooking shows, social media as well as local restaurants and the foodservice scene.”

Even if major supermarket and supercenter chains have a strong presence in the Detroit marketplace, a thriving independent grocery segment continues to attract consumers.

“Independent retailers have a very strong presence in Detroit,” Grainger says. “They pride themselves on having the highest quality of product to offer their customers and many produce managers are picking out product from our warehouse daily.”

Ben B. Schwartz is aware of the popularity and character of the independent retailer.

“Detroit has a strong independent retail presence.” Grainger says. “The expectation and attention to quality has driven us to align our company with that of our independent retail partners.”

Despite all the traumas they’ve faced, Dominic Russo, buying and sales director/logistics coordinator, Rocky Produce, Detroit, says, a lot of grocery stores in the Detroit area have had the resilience to keep moving forward. “The well-established stores are doing well,” he says.

In terms of consumers, Detroit has a diversity that requires consideration.

“Detroit can be viewed as unique due to the diversity of the customer base and the many different cuisines, eating habits, and variety of holidays celebrated based on different cultures in our market reach,” Riggio says. “At the same time, it is very much the same as other markets in that there is always a need for value. Value is the balance of quality, price and service. Certain items are more in need of quality, while other items are more in need of price — this is the puzzle we solve each and every day.”

Current challenges are produce prices, labor and inflation, says Russo, who adds that, through all the recent difficulties, the company’s job remains making “the best decisions we can for our grower partners.”

For the most part, demand isn’t changing radically. Detroit consumers are being selective and, as in the Great Recession, are moving toward basics and away from more upscale items.

“Labor and inflation are impacting both supply and demand,” Grainger says. “Household consumers are looking for lower-cost items and restaurants are looking for items that involve less labor in the back of the kitchen.”

As a business, he says, Ben B. Schwartz is watching reactions to the current economic environment to determine how to position the business in the next phase of an unsettled marketplace.

“Inflation and labor are the biggest concerns right now,” Grainger says. “We have not experienced inflation like this since the 1980s, so it is hard to tell how the population that has not experienced the inflationary pressures on their incomes will respond. The question is where they will cut costs and/or make purchasing habit changes.”

With the nature of the perishable produce business, Riggio stresses people have to be adaptable.
“In the fresh wholesale industry, we are inherently problem solvers,” he says. “Each and every day, we are faced with multiple challenges, from weather to logistics. While COVID was definitely uncharted water for us, the mindset of working through the daily challenges was nothing new. Inflation will also become another challenge of the day for us. It is not something we can control, so we don’t spend any time complaining or dwelling on it. We will get through inflation, just like we get through everything else from Mother Nature and other business-altering forces.”

RESTAURANTS SURVIVING

At the Eastern Market, Seng says they’re seeing large shifts in demand on pre-cut, ready-to-cook products, because of the foodservice sector labor shortage. “An institution that may have once cut their own fruit or peeled and diced carrots and onions now need to have that work done ahead of receiving in order to be successful in a short-staffed kitchen. We’ve seen requests for shucked corn and topped strawberries, anything that can be done to save time and labor back of house.”

Riggio observes that foodservice was hit the hardest by COVID-related restrictions, and while many have come back, “they are still in a rebuilding stage,” he says. “Smaller menus, reduced hours and reduced capacity are the lingering effects, mostly due to lack of quality labor, all stemming from COVID. Unfortunately, some restaurants did not recover and are permanently closed, as they could not find a way to comply with restrictions and manage their businesses effectively.“

Grainger says new foodservice trends can give produce a boost in application. “I think meal kits, delivery options and new cuisines are a positive impact on the produce industry, as it could give access to fresh produce or a new application of a fresh produce item.”

He adds that consumers’ growing health awareness has the potential to boost produce use for some time, particularly if the produce sector enhances the social conversation.

“The consumption of fresh produce increases with more knowledge we spread of health and wellness and the more educated the population becomes,” Grainger says.

Local produce has become a cause for a lot of people in the Detroit market, and a lot of folks will go out of their way to purchase food from in and around their community. The consumer determined to support local growers and consume food from the region has generated an important market dynamic in Southeast Michigan, and wholesalers have been adapting.

“Local season changes the supply chain and makes it much shorter, but with the same complexities,” Grainger says.

Russo says Rocky Produce leverages strong relationships it has across the country and uses its facilities to ensure it’s filling customer demand as seasons, growing areas and availability change. He does say, however, that local produce as it becomes more prominent can mean the ability to set a better value/quality balance and mitigate transportation costs.

“You buy it, and it helps,” he says.

John Corradi, who owns the restaurant The Rock on 3rd in suburban Royal Oak, said the restaurant scene in Detroit has been recovering from the pandemic, but now has taken on fuel costs, labor shortages and inflation. Rising costs, including those for produce, have been the latest bump in the road, he says. In some cases, it’s because of supply problems that arise for any number of reasons, ranging from short crops to transport availability. But exacerbating it all are fuel costs that remain high enough to make even local movement of produce that much more expensive.

“The recovery for us right now has not been that bad, because people have been getting out and doing things,” Corradi says. “The biggest problem has been the supply chain and the cost.”

Various commodities have skyrocketed in price recently, costing Corradi multiple times what he’s typically expect to pay. At that point, a restaurateur has to be diligent, he says. Independent restaurants often lack the resources to constantly adjust menu prices and so have to lean on costs, using ingredients effectively and minimize waste. Corradi has reduced the number of menu options, so he can continue providing quality food, but with less kitchen help.

Yet, a lot of consumers still want to get out on the town and that helps compensate for the troubles confronted. “We’re not just surviving,” Corradi says, “we’re thriving.”