I hope that all is well with you, your families and your co-workers.
The coronavirus has upended the way business is being done across the world. The grocery industry has found itself as one of the key retail businesses which is still functional across the country and pivotal to life today.
This edition of The Lansing Group’s blog will cover several topics putting recent changes in the US grocery market in perspective and providing some tips for this unique business situation for manufacturers.
During the initial weeks of stay at home initiative by a state, sales increased in some grocery stores by as much as 400%. This has put an enormous stress on the stores and distribution channels, plus on manufacturers as they struggle to pump out as much product as possible to fill pipelines. Once consumers in a market have “loaded up” on supplies, sales continue to be up as much as 30 – 40% per week. Stores are starting to see fewer shoppers now but buying remains strong as many consumers are stocking-up for one or two weeks in one shopping trip. Without the broad options for people to eat out and with entire families at home for three meals a day plus snacks, grocery sales are benefiting.
Several buyers have told me consumers are looking for center of the plate items and “basics”. They want soup, pasta, rice, baking needs and the like. At times stores may be out of specific categories or specific products. Trucks are arriving as quickly as needed to fill retail inventories.
As consumers, we see this when we go to stores or order for pick-up or delivery: often products we order are available one day or hour and not the next.
There are often strange product shortages in stores. For example, toilet paper, sanitizing products and meat are in huge demand and often unavailable. Baking products are best sellers and may be out of stock as the tasty pastime of baking has dual benefits. For a couple of weeks, even iodized salt was out of stock in the stores where my wife and I shop.
With foodservice sales significantly reduced, many foodservice producers are trying to sell foodservice items to the retail market. This can be a problem as the quantities are often too big for purchases by consumers. There are also labeling concerns. Some foodservice manufacturers are reworking their foodservice items into retail items, if possible.
Of all the buyers with whom I have talked, none are overpaying for products. One buyer who sells hand sanitizers at $1.00/unit said the store was offered the same product at $4.00/unit. No purchase was made as the retailer did not want to be accused of price gouging.
We all know the health safety issues with shopping in stores, but there are other problems shopping online. Shopping platforms are often overloaded and some retailers are having trouble keeping up with processing orders. We order online from Walmart once a week for pick-up and often need to place the order at 4:00 AM as orders placed during the day show “no availability for a time slot”. This should take care of itself over time as the designers adjust their systems and retailers staff-up for the increasing pick-up and delivery volumes.
The good news is that the food channel works. Products are being produced, though some manufacturers are putting emphasis on their best-selling basic products. This is a good time for manufacturers to reduce production or stop producing slow selling items.
Products are arriving from farms, though there is a fear that the coronavirus could hit farm workers in rural communities in the coming weeks. Foods are also arriving from overseas by ship and by air. In some instances, quantities may be limited due to the worldwide demand, but the system is functioning.
One bit of caution, The World Food Programme (WFP), a Rome-based UN agency, stated that “we may soon expect to see disruptions in food supply chains . . . as panic buying or behavioral change (occurs) over food security”.
An issue of concern, which several manufacturers and retailers have told me, is the strain on the trucking system. Trucks are difficult to find as the industry is at full capacity. One retailer had a truck which waited at a warehouse for a pick-up for twelve hours, another for 24 hours. Shipping prices have risen significantly in some corridors.
A friend who owns a company which trains truckers said that newly trained truckers can’t be tested and licensed as the testing and licensing offices are closed. The trucking association is putting pressure on state governments to re-open them. Once they reopen, it is possible that the states may lower the standards for drivers to meet the demand which is bad for the business and society.
Now is a good time to look at your inventory situation and determine if you have any products which you need to sell. You don’t want to be holding products in inventory costing valuable dollars. Many mainstream retailers and distributors may not have the time or inclination to bring in new brands or items. One manufacturer told me they can’t get any presentations with retailers and are only selling what’s currently authorized. There could be opportunities in the secondary market for your products.
Universally, alternate channel buyers are looking for products to service their consumer base. They are being careful to buy items that fit their customer and pricing profile. There is business to be done with this market.
To discuss overstock or problem products you want to sell, contact Dick Lansing at
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