As COVID cases rise sharply in many areas of the country and the trend toward at-home dining continues, food retailers are bracing for strong demand during the coming months.
Whether or not a sudden surge like the one that cleared retailers’ shelves in March and April will recur has yet to be seen, but this time around, operators and their suppliers may be better prepared.
“The main initiative we see grocery buyers undertaking is the replacement of brands that are struggling with supply issues,” said Jeff Lawrence, growth solutions manager at KeHE Distributors. “Some suppliers were hit hard by the demand surge in March and have unsuccessfully played catch-up ever since. Others are simply struggling with the normalized increased demand we’ve seen in the last six months as consumers stay home and cook.
“Retailers’ patience with supply issues has run out, and they’re more willing than ever to bring in new brands that can promise a steady product supply,” he said.
Orders for these new brands have been much larger than they were before COVID, Lawrence said.
“Retailers learned some harsh lessons in March” by relying on single suppliers for large proportions of certain products, he explained.
Among the categories retailers are watching closely are baking ingredients, many of which were in short supply in the spring when homebound consumers suddenly began spending their days making cookies and pies. Demand for these items also increases significantly as the year-end holidays approach.
“If the normal holiday demand increase combines with a COVID surge, retailers will struggle to match demand,” said Lawrence.
He noted that frozen foods, which also saw a spike in demand during the initial COVID surge, also tend to sell well during the winter months. Frozen vegetables and frozen pizzas are two categories to watch, he said.
“Similar to baking ingredients, these two products typically have their best months during the winter and were also wiped out in March,” said Lawrence.
‘We’ve Been Through it Before’
Chad Winters, president at Leon’s Gourmet Grocery in Lincoln, Nebraska, who also goes by the title of chief foodie, said he thinks the retail supply chain, and society in general, may be better prepared for a second surge.
“I think what’s going to make it more manageable this time around is that we’ve been through it before,” he said. “We know how to identify symptoms, and we know what the protocols are. In the first surge, it was all new, and it was happening in real time.”
Now, consumers may have more faith in the supply chain and might not feel the need to stockpile as much as they did in the spring, he said.
Leon’s underwent what Winters described as a “once-in-a-generation” remodeling during the past year, keeping the store open the entire time and adhering to strict safety standards for employees, construction workers, and customers. Throughout the year, Leon’s and its three small sister stores, which each operate under different names, have not had any cases of COVID among their 100 or so total staff.
Winters said the coming months will be challenging, however.
“In Nebraska, we are going to be in winter for the next five to six months,” he said. “That is going to be very hard on people.”
He said it will be important for the company to remain vigilant about adhering to sanitation and social distancing guidelines, and for both employees and customers to avoid risky behaviors such as coming into the stores with cold or flu symptoms.
Winters credited the company’s main supplier, Associated Whole Grocers, for keeping the stores stocked as much as possible and for taking a leadership role with its retail customers.
“We don’t really have any glaring holes or issues,” he said. “There are a few products that manufacturers have cut back on, but it’s not just Leon’s that’s out of [those items]. Everyone is out of those items.”
Local Partnerships Boost Retail Supply
Erin Lynch, director of operations, Rosemont Market & Bakery in Portland, Maine, said the small chain has been able to remain in-stock thanks to its local vendor relationships.
“We source a lot of things locally, and our suppliers have been able to keep up with our demand,” she said.
Rosemont has its own warehouse and a diverse network of vendors, including United Natural Foods Inc. and several other local and specialty food suppliers. And when retail supplies of some items, including rice and flour, ran low this spring, Rosemont relied on the foodservice and bakery sides of its business.
“When retail flour became scarce, we were able to repackage the flour we use in our bakery, and when rice became scarce, we were packaging up rice from our kitchen,” Lynch explained.
She said grocery sales have risen sharply recently, and she expects the trend to continue as the weather cools and consumers continue to cook at home. Rosemont is seeking to capitalize on the home-cooking trend by offering more variety and more specialty items—such as duck and different cuts of lamb—so that customers can try to recreate restaurant-style meals at home.
“We need to keep it exciting for our customers,” said Lynch. “We can offer relief from the winter doldrums with the food we offer in our markets.”
Some items, including canned pumpkin, have already been difficult to procure, she said, and she’s heard that flour, organic butter, and heavy cream may also be harder to find in the coming weeks as the holidays approach.
“It has been interesting watching food trends change,” she said. “I thought the center-aisle products were going to be permanently declining, but it seems that area of the store is just growing and growing and growing.”
Tim Bartlett, general manager of the two-store Lexington Cooperative Market in Buffalo, New York, said his company’s strong relationships with local farmers and other vendors helped the retailer get through the first surge in demand in the spring.
“Most of our out-of-stocks were products from national vendors,” he said.
When other stores ran out of various meats, Lexington was able to stay in-stock based on its relationships with local poultry farmers and cattle ranchers, Bartlett said.
And when national suppliers ran low on toilet paper in the spring, Lexington was able to repurpose the bulk toilet paper procured through its cleaning-supplies vendor.
This time around, Bartlett said he is optimistic that consumers have learned that panic-buying isn’t necessary.
“I am hopeful that the first freak-out taught everyone that if they just stay calm, and they don’t stockpile, the shelves will be full throughout,” he said. “We’re going to continue to stay vigilant, and we’ll continue to be in communication with our local partners and our national partners about the situation.”
Meanwhile Lawrence said KeHE has diversified its sourcing to include several new vendors, and has been working with suppliers to ensure they are prepared for a potential second wave of increased buying activity.
Related: FMI Creates Illustrated Pandemic Effects on Grocery Price; Majority of Americans Will Stockpile Groceries.
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