With supply and demand stressors all over the board during the early months of the pandemic, grocers were forced to adapt quickly and skillfully to ever-changing conditions. Not only were supplies unstable, but operators took many extra steps to ready their stores for whatever might change on a weekly basis.
Grocers deal with increased costs
Two points that were consistent as the months progressed were price increases and revenue spikes.
Grocers across the board agreed that both costs and revenues increased during the past 18 months of the pandemic. Chain grocers were more likely to notice increased revenues, while independent grocers were more apt to focus on the increased cost of goods. Part of this is likely due to the structure of their respective organizations, as chain grocers often have more corporate personnel to handle business matters.
Wholesalers and independent grocers were more apt to completely agree that the cost of goods had increased in recent months than chain grocers, but—to be clear—all respondents noted the increase.
Grocers at all levels also expressed that they had incurred increased distribution costs over the past 18 months. Of those surveyed, wholesalers were more likely to note this trend (probably because they are distributors themselves), but independent and chain grocers also noticed these costs to a lesser degree.
When it came to keeping up with demand for grocery items, retailers indicated that they were more pleased with their supply chain partners' abilities to keep up with fresh produce than the demand for other products, like nonfood items or shelf-stable goods. The perishable nature of fresh fruits and vegetables likely factored in here, as systems were already in place for more frequent deliveries (assuming that the supply was stable).
All grocers said that they prefer to work with local supply chain partners for fresh produce. Most of those surveyed said they did not struggle when buying consistent fresh produce quality over the past 18 months, even though supplies of products, like toilet paper and sanitizing wipes, caused a frenzy in some stores. Independents, chain grocers and wholesalers alike did not indicate a problem with sourcing a variety of fresh produce either.
Grocers predict positive revenue trends for the months ahead
After all they've weathered this last year, grocery operators are cautiously optimistic for what lies ahead.
In looking toward the future of the grocery business, independent retailers were a bit hesitant to say that business revenues will increase during the next 18 months. When asked if they thought business revenues will increase over that time frame, chain grocers “mostly” agreed, while independent grocers' opinions fell closer to “agree somewhat.”
Retailers of all segments agreed that they think the cost of goods will increase in the months ahead with most close to the “mostly agree” level.
When it comes to sourcing products, grocers were not as concerned in the short-term outlook. Most indicated that they were not concerned about struggling to buy consistent fresh quality produce in the next 18 months, nor were they worried about finding a large variety of fresh produce days and weeks ahead.
Grocers overall are fairly confident in the supply chain for fresh produce with most ranking it a more than 7.5 on a 10-point scale. Chain grocers were slightly more confident in the systems in place than independent grocers.
Providing the goods that consumers need is a team effort, and retailers know it. Grocers across all store types indicated that they will work with local supply chain partners to source the items shoppers need. This is especially true when it comes to fresh fruits and vegetables, as local/ regional connections are more common than when sourcing items like shelf-stable foods or everyday products and supplies.