‘We’re always chasing one thing to the next’
Chicago-area grocers stock up to ward off shortages as COVID-19 cases rise
After shelves were emptied of goods like toilet paper, canned food and hand sanitizer at the start of the pandemic, Chicagoarea grocery stores and suppliers are stocking up to avert shortages as coronavirus cases rise in Illinois.
On Thursday, Chicago Mayor Lori Lightfoot announced a 10 p.m. curfew onall nonessential city businesses and a prohibition on indoor service at bars without food licenses. Gov. J.B. Pritzker also announced stricter rules for some counties, including Du Page, Kane, Will and Kankakee.
Grocers and food suppliers are leaning on lessons learned from the spring to make sure they can meet demand from customers who may once again be preparing to hunker down at home.
If the virus doesn’t get under control, the city could see a second stay-athome order, Lightfoot warned Thursday.
“I don’t want to sound alarmist, but by all indications, it seems like a second wave might come through and we’re always trying to protect our inventory levels against our customers’ demands,” said Richard Saltzman, owner of Banner Wholesale in Chicago, which supplies goods to independent grocery stores and some chains.
Saltzman is buying extra pallets of staples like flour, sugar and salt in anticipation of a second coronavirus wave, but has had trouble finding enough toilet paper, paper towels and Lysol products to stockpile.
“Whenwe find those rare supplies, we can usually only getonepallet at a time,” he said.
Area stores have been stocking up on hand sanitizer, masks and gloves both for customers and employee use, said Vlad Kryvdyk, owner of Chicago-based supply, food and beverage distributor Mega Distributions.
“Glove products have been really challenging to get, something that would go for $30, whether medical grade or not, is now at a 150% price increase,” Kryvdyk said, referring to a 1,000-pack of food-service gloves.
Grocery stores are increasing inventory on other items with recent price increases, such as aluminum takeaway containers, foil and block cheeses, according to Danny Friedman, co-owner of Chicago-based Food and Paper Supply Co.
Pete’s Fresh Market’s Chicago stores have had trouble filling shelves with enough shelf-stable groceries, frozen foods, and dairy. Suppliers are only able to fill between 75% and 80% of what Pete’s orders in those categories, said Joe Kalavo, the company’s chief operating officer. Kalavo said he expects the shortages to last through 2021.
Potash Market, which has three Chicago locations, has had trouble securing cleaning products, foil, paper products and sugar, CEO Art Potash said.
“We expect the shortages to continue,” Potash said. “If there’s an increase in buying, that’s going to make it even worse.”
Even though many essentials are still in high demand, experts say they don’t expect as much panic buying as in the spring, when stay-at-home orders came abruptly and people did not know how long they’d be stuck at home.
“Now there’s much less uncertainty about whether we can keep an economy running during a pandemic,” said Constantine Yannelis, a behavioral economist at the University of Chicago’s Booth School of Business.
In order to temper consumer stockpiling, big-box retailers like Target, Costco and Walmart continue to place limits on the number of items customers can buy atone time of popular goods like toilet paper and hand sanitizer.
Grocers like Jewel-Osco, Mariano’s and Potash Markets also have maintained limits on purchases of highdemand items.
Grocers using alternative supply chains have had better luck keeping some products in stock.
Banner Wholesale has been sourcing Clorox products from Mexico, according to Saltzman.
“Our American suppliers can’t fulfill orders but Mexican supply chains haven’t been interrupted as much,” Saltzman said.
Green Grocer Chicago, a natural food and wine store in the city’s West Town neighborhood, sources most of its meat and produce from local farmers. Except for flour and yeast, the store was able to keep shelves stocked during the height of the pandemic when its sales more than doubled, according to store manager Dileep Gangolli.
While grocery supply chains have mostly recovered from the shortfalls seen in the spring, the industry is still having trouble keeping shelves fully stocked with the full array of products shoppers were accustomed to pre-pandemic.
“They’ll send in 60%, 50% of the order. They’re always out of something, and we’re always chasing one thing to the next,” Saltzman said, referring to his suppliers. “It’s challenging.”
To meet growing demand, food companies have had to focus production on their core products. That means shoppers can expect to find fewer flavors, varieties and sizes of their favorite products if there is another surge in demand this fall.
“Companies have had to focus on the core parts of their assortment that they can mass-produce to try and keep up with the demand,” said Steve Craine, a partner at the consulting firm Bain. “That has caused themto revisit the complexity that was in their assortment pre-COVID.”
J.M. Smucker Co. temporarily scaled back the production of some jam flavors and Jif peanut butter items like its Reduced Fat, Omega 3 and Simply Jif versions. The company also reduced the production of some Folgers and Dunkin coffee flavors, according to company spokesman Frank Cirillo.
Kraft Heinz, the Chicago- based company whose brands include Oscar Mayer and Jell-O, also has decreased production of certain product varieties, as has Chicago-based Conagra, the company behind Birds Eye, Reddi Whip and Marie Callender’s.
It’s likely these coronavirus-induced changes could last beyond the pandemic, according to Craine, who expects grocery stores may offer 5% to 10% less variety incenter-store items like soups, chips and frozen pizza in the future.
“COVID triggered the question: Is it worth it to produce all of these varieties?” Craine said.
Retail models like Costco and Trader Joe’s, where fewer assortments of products are offered, were catching on before the pandemic. The coronavirus prompted retailers and manufacturers to reconsider the economic advantages of that model, Craine said.
“You can drive tremendous volume in one to two varieties of a product,” he said. “And customers are more comfortable with curated offerings.”
Fewer product varieties also translates well into online shopping models, which have taken off over the last eight months.
“It’s difficult to browse multiple brands of the same product online, especially on a mobile phone,” Craine said.
As the holiday season gets underway, grocers could be facing additional supply challenges. This year, people will travel less, leading to smaller holiday celebrations. A survey conducted by the meat company Butterball found 30% of people say they plan to host only immediate family this year, which is double the amount who traditionally do so.
That means demand for holiday turkeys and other meats will be up, with 3 out of 4 survey respondents indicating they will purchase the same size turkey or a larger turkey than last year.
Nate Rempe, president of Omaha Steaks, said the mail-order meat company began stockpiling inventory months in advance and expects “a substantial holiday season, probably outpacing anything we’ve seen.”
Earlier this year, coronavirus outbreaks caused meat processing plants in several locations including Monmouth, St. Charles and Rochelle to close, creating a bottleneck for America’s meat supply.
Eight months into the pandemic, workers in slaughterhouses, who typically work side-by-side, remain vulnerable, according to Anna Nagurney, a professor in the Isenberg School of Management at the University of Massachusetts who studies supply chains.
“Those first few months were very hectic,” said Beth Breeding, vice president of communications and marketing at the National Turkey Federation. “The supply chain challenges worked out, but we’ll have to continue to monitor everything. We’re heading into the Super Bowl of the turkey industry with Thanksgiving.”