Food retailers are diversifying their sourcing operations and turning to new vendors amid ongoing supply chain challenges, particularly for products imported from overseas.
“One of our greatest challenges is that many of the everyday products that we’ve normally sold have been limited,” said Daniel Fried, store manager of Cedar Market in Teaneck, New Jersey. “Some suppliers, instead of producing their entire line, are only focused on their strongest items because they’re short on the staff.”
Cedar Market, which offers a broad array of groceries and specializes in kosher items, has reached out to alternative suppliers for some products that have been discontinued by their primary supplier, he said. In some cases, the retailer is using as many as four or five suppliers to fill the gaps.
Once the main supplier has a product back in stock, Cedar Market will seek to buy several months’ worth of inventory, or more. The retailer added two 48-foot trailers to store product during the pandemic, Fried said.
In some cases, Cedar Market has also sought lower-priced substitute items to help its customers manage costs during the current inflationary period, Fried said.
Imports from overseas have been among the most challenging products to procure — including pastas, sugars, salts, and oils.
Fried said he remains uneasy about the supply chain going forward, especially as Passover approaches in April. The retailer traditionally places orders in February for Passover items, but this year the company began placing orders in November.
“We have to take in merchandise almost three months early, just to be sure,” said Fried. “That’s also an investment, because those bills come early.”
Last year, keeping ketchup stocked on the shelves was a major challenge, for example, so this year Fried said he ordered extra just to make sure the store can remain in-stock.
Fried also said the retailer has formed some strong relationships with new suppliers during the pandemic that could be long-lasting.
“We’re still keeping our current vendor relationships in business and happy, but there are a lot of products out there that some suppliers don't carry,” he said. “We're all about having variety on the shelf, so that will be a big factor as far as keeping suppliers.”
Small Multicultural Grocers Struggle
Many smaller specialty grocers that focus on serving multicultural communities have struggled with the current challenges of the supply chain, said Boyede Sobitan, co-founder and CEO of OjaExpress, which works with small grocers serving immigrant communities in Chicago to help put their products online for delivery.
“A lot of them are having issues, because they don't have technology like the big-box stores, and they don't necessarily have a perfect handle on inventory,” he said. “They're running out of products, and the cost of importing and transportation when they do order products has skyrocketed … to the point that their customers can’t afford to buy them.”
In addition to providing an online marketplace for small multicultural retailers, OjaExpress is seeking to help them with their supply efficiencies by creating platforms for group buying that could allow them to buy some products in larger quantities. Many of these grocers are hindered by the fact that suppliers sometimes have order minimums, which has prevented some retailers from diversifying their supply chains and finding alternate sources for products, Sobitan said.
“Any retailer that had only one supplier of a product is at risk,” he said. “You need to have at least two or three to be able to get products to your customers,” he said.
In addition to their supply chain issues, these smaller grocers are also struggling with the tight labor market, Sobitan said.
“We have the congestion at the ports, we have the labor shortage, and we have the inflation costs,” he said. “Those are the trifecta of issues that a lot of smaller retailers can't really withstand.”
Diverse Supply Networks Boost Large Chains
In a recent White House roundtable with grocery retailers, Carlos Castro, CEO of Todos Supermarket, said small grocers are at a disadvantage during the current supply chain crunch.
“Although independents are resilient, and our customers can rely on us during the holidays, independent grocers unfortunately continue to face competitive disadvantages when sourcing products in short supply,” he said.
Large grocery chains including Kroger and Food Lion, however, said they have been able to remain in stock on grocery essentials thanks in part to their access to multiple suppliers.
“We continue to work with our diverse and broad network of suppliers, source products from new partners and engage directly with additional local vendors,” said Meg Ham, president of Food Lion.
In addition to challenges securing grocery items, food retailers seeking to expand are also facing delays in the supply of needed equipment.
Sprouts Farmers Market, for example, recently said in its third-quarter earnings call with analysts that six stores that had been scheduled to open in the fourth quarter would be delayed until early next year because of delays in the supply chain for equipment.
In its grocery supply chain, meanwhile, Sprouts benefits from the fact that it buys from a lot of small producers, said Jack Sinclair, CEO.
“We are fortunate that we deal with smaller vendors to whom we're a big customer,” he said. “This advantage allows our teams to continue to manage the health on the shelf, providing a great buying experience for our customers.”
Editor’s Note: How is your company dealing with supply chain issues? Weigh in here on the specialtyfood.com Community Hub.
Related: Food Retailers Discuss Supply Chain With President Biden; Restaurants Cope With Shortfalls of Packaging, Specialty Ingredients.
from Industry Operations https://ift.tt/3yJ1qVD
No comments: