Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.
A trip to the grocery store can be a harrowing experience for the health-conscious. Choosing from among gluten-free this and free-range that can be a time-consuming and information-overloaded ordeal.
And how do you know whether the information on the label is legitimate?
Meghan Dear resolved to ease these headaches five years ago when she founded Localize in Edmonton. The idea was to give customers more information about their food, both on the front of grocery shelves and electronically through a QR code-scanning smartphone app.
The resulting data outlines where the food is produced and processed, who made it, where the ingredients come from and whether it has any third-party certifications regarding its sustainability or integrity. It also gives the product a score that ranges upward in quality from one through 10.
“We’re addressing a challenge in the grocery industry, which is that ‘local’ is very topical and important to consumers,” Ms. Dear says. Grocery stores “want to be able to converse on what they’re doing around local food in a credible way.”
Localize began by servicing one store with five labels that Ms. Dear printed at home. Today it has a database of about 120,000 products in more than 300 stores, and she expects to double the number of stores by midwinter. Ms. Dear predicts the company will be profitable in its current financial year.
In five years, Localize has grown to 15 employees in Edmonton and Toronto, where the company recently opened an office to spur growth in Eastern Canada and the United States.
Localize services an association of co-operative food stores in Western Canada, but hasn’t yet signed any of the country’s major grocery chains. The company makes its money through the stores, which pay based on the number of Localize-labelled products they carry.
“As we move across Canada we’re looking at continuing to deal with both the smaller independents, but also with the large guys,” Ms. Dear says, adding that the company is expecting to pick up its first partner south of the border by late spring.
Its challenges are to build its database of products, find more efficient ways to aggregate information about ingredients, and persuade more stores to adopt Localize.
“Largely it’s about getting the word out to food suppliers,” Ms. Dear says. “We drive sales, we’ve proven that.”
The Challenge: How can Localize increase its foothold among grocery stores in North America?
THE EXPERTS WEIGH IN
John Cranfield, food, agricultural and resource economics professor at the University of Guelph, Guelph, Ont.
People in their 20s have driven a lot of the food movement in the last few years, and as they start to have families, some of those values and beliefs will become more reinforced. Localize’s technology could become important to them. Maybe Localize needs to drill a little bit deeper to give the story behind the food and, I think on the sustainability side, try to be more transparent by what’s meant by that.
The challenge, though, is you then start to present too much information to the consumer. If you’ve got a grocery cart full of kids and you’re scrambling with your iPhone to get the QR score and to see if this is sustainably made or not, do you really care about some of those details? There’s got to be a balance in terms of giving consumers enough information so they can make an informed choice and overwhelming them to the point where they don’t have time to process all this, so then they’ll just buy what they bought last week.
Sunil Mistry, partner, KPMG Enterprise, Toronto
There is certainly an appetite for people to know about where their food is coming from, and what is in their food.
If you are a higher-end grocer such as Longo’s or Whole Foods, Localize would definitely add to your ability to sell into that marketplace and credentialize that you are doing right by the local farmers and the ingredients. That’s because if you are that kind of grocer, saying you only provide the best quality organic, locally raised meats, for instance, maybe it’s just me, but I think there are a lot of people who say, “Well, how do I know that?” How do you prove that? Localize can really provide some credentials when selecting products.
If you’re Localize, you should go to these stores and say this may actually drive your sales, because it’s not that grocer saying what they’re doing, it’s a third party coming through and assessing, and then providing the score.
Leah Garrad-Cole, co-founder and president of Love Child Organics, which produces organic baby and children’s food (it has products listed with Localize), Whistler, B.C.
They will need to make sure that the criteria for the Localize score is clear. They need to educate consumers on what the score means. They also need to educate the businesses they’re working with in terms of getting products listed because it can be a little complicated.
Their communication with us has been excellent, and I really like what they’re trying to do. For us, sometimes it’s a bit complicated because we make products in different places; we don’t have one factory. We have mainly local ingredients but a lot of them are from all over the world, so it does become complicated trying to figure out where our products fit within their program.
THREE THINGS THE COMPANY COULD DO NOW
Make sure the company has the right balance between too little information and too much information.
Spread the word
Reach out to brands and retailers and tell them how Localize can boost their sales.
Ensure that the certification process is top notch, so if Localize states that something is organic or grass fed, there is documented proof.
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Interviews have been edited and condensed.