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Grocery Stores Slowly Catching Up With Demand

The retail grocers who sell finished agricultural products like beef and eggs to consumers have had a rough time during COVID-19. Greg Ferrara, president and CEO of the National Grocers Association, says their stores saw unprecedented demand levels ramping up in March that were very hard to keep up with.

While they aren’t at those levels currently, grocery stores are still seeing higher than normal demand levels for this time of year.

“As things have progressed, we’ve seen that demand, that stock-up initial demand, kind of reduce some. However, we are still having members that are reporting same-store sales that are up anywhere from five to 30 percent over the same time last year. Effectively for our retailers, it’s like having the demand right around the peak of Thanksgiving or the peak of Christmas weeks every single day.”

He says grocers are learning how to adjust with this level of sustained demand. Beef shortages were well-documented through the early weeks of COVID-19.

Ferrara used another well-known example to illustrate the challenges that grocers faced during March and April, which they’re still working to overcome.

“One national company, let’s say, would typically keep around 20-to-30 weeks of bath tissue in reserve, and that was there to meet the demand for the product going on special, and sales spikes in different areas,” said Ferrara. “At the peak of this crisis, they were in the hole something like 73 weeks. If they did everything they were doing that day and had no one else buying the product, it would have taken them 73 weeks to get them out of that hole. They’re in a much better place today. I think they’re caught up to being in the hole around 30 weeks, but they still have a way to go.”

Ferrara says one positive thing to come out of the last several months is consumers are a lot more cognizant about where their food comes from. Grocers across America are showing innovative ways to meet what will likely be elevated demand levels for many months ahead.

“Companies are realizing that this is not just a one-time spike or a limited spike. We are anticipating sustained demand in grocery for the foreseeable future, so we’re probably looking at, at least for the next year or two, sustained growth,” he said. “This is not just a blip, and so we need to make sure that we’re standing up to meet the demand that’s out there. One advantage that members have, these locally-owned and independent supermarkets, is they have a really strong connection to local producers, local farmers and ranchers, and other producers, so when we’ve had challenges in the supply chain with different commodities, they were able to pivot and were able to be really innovative, and serve their customers.”

Ferrara says everyone in the supply chain has learned some valuable lessons since March, and the supply chain is already seeing the results of those lessons.

“There’s going to be a lot of lessons learned coming out of this throughout the supply chain, and those lessons are already being captured and we’re adjusting. I’ve already seen things starting to adjust within the industry to adapt some of those lessons learned. That will be from our manufacturers to our wholesalers. We have all the wholesalers in the country as well, those mid-distributors that receive a product from a manufacturer and take it and distribute it down to the local stores and regional stores. The technology is going to be a big thing that comes out of this because we’ve seen e-commerce demand just explode.”

Ferrara says they “aren’t entirely out of the woods yet,” but they are taking some of the lessons they learned to make things up and down the grocery store supply chain more efficient in the future.