Grocery business soars as coronavirus cases surge
Stores don’t foresee new shortages, panic buying
Even as the U.S. economy was shrinking this year at a pace never before seen, grocery sales have soared as cooking at home remains the new normal amid a surge in coronavirus infections. Grocers say that while the panic buying seen during the early days of the pandemic in March and April has disappeared, the sales rate at stores has barely slowed. Sales in mid-July topped the busiest days of the year – the end of the year holidays.
The good news for consumers is that rising food prices seem to have stabilized as suppliers have caught up with demand. Meanwhile, the costs associated with a boom in e-commerce sales and outfitting stores with such things as plastic shields, masks for employees and sanitizing supplies have been absorbed into the marketplace.
Grocers also say they are positioned better to handle any panic buying that might reoccur (though they don’t expect any) as positive COVID-19 cases surge across Wisconsin, the Midwest
and the Sun Belt.
“If I would have told you in January of this year that you and I would be having this conversation, you’d have said, ‘Pat, you’re nuts. You’re smokin’ something,’ ” said Pat Fox, chairman of the board of Fox Bros. Piggly Wiggly, a chain of grocery stores in Milwaukee’s outermost suburbs.
“There are so many variables going on right now,” Fox added. “With this latest spike in Wisconsin and nationally, what’s going to happen? I just don’t know.”
While buying leveled off, basket sizes — how much someone purchases during each trip to the store — remain much larger than average, Fox said.
That indicates that a lot of people are hunkering down at home, even as stayat-home orders have been lifted in the state.
“People are limiting their visits to the store,” Fox said.
The numbers continue to be nothing short of astonishing.
The Roundy’s Supermarkets distribution center in Oconomowoc, which supplies 106 Pick ’n Save, Metro Market and Copps stores in Wisconsin, shipped 158 million pounds of food during four weeks in late June and early July, said Richard Bridwell, senior supply chain manager at the facility.
That’s down only slightly from the 162 million pounds shipped during four weeks of panic buying in early March and April.
Milwaukee-based Roundy’s is a division of Kroger. The Oconomowoc distribution facility usually has its busiest days right before Thanksgiving when tons of food are shipped in preparation for holiday gatherings.
“That’s usually our busiest Monday of the year,” Bridwell said of the Monday before Thanksgiving. “We matched it this past Monday with stores refilling coming out of the weekend to meet increased demand.”
Many restaurants are doing only a fraction of the business they did prior to the pandemic. Some have closed altogether.
Consumers are still purchasing pickup and delivery of restaurant food, but the shift to grocery for food purchases has remained.
“Consumers are just kind of taking a wait and see attitude and that means more grocery and less restaurant,” Shea said.
We’re done stuffing our pantries
Grocers have made adjustments as consumers changed their buying habits.
“When the pandemic first started ... most of our tonnage was dry grocery items,” Bridwell said. “As people stockpiled dry grocery items, they shifted to more everyday cooking at home.”
The product mix changed as people settled into their new routines.
“What we saw was our dry grocery volume declined and our perishable, fresh items are surging now,” Bridwell said.
The distribution facility had to quickly adapt.
“That dynamic changed,” Bridwell said. “We realigned again,” shifting workers from dry goods to perishables. “We added resources to our perishables shift and took perishables to a 10-hour shift,” he said.
Other grocers are experiencing similar trends.
“It’s certainly moderated from that initial panic buying that we experienced in early March,” said Ted Balistreri, one of the family co-owners of the Milwaukee-based Sendik’s Food Markets stores.
The stores continue to do more business than the company was anticipating.
“We continue to see pretty heavy traffic,” he said. “There is a lot more eating at home, and we can see that in our sales trends.”
Things like fresh meat and fresh and frozen seafood continue to be strong sellers, Balistreri said.
Sales are strong across virtually all categories, including dairy, frozen foods, produce and wine and spirits, he added.
His team expects the robust sales to continue.
Prices leveling out
Prices, too, have moderated but manufacturers are still doing less discounting, Balistreri said.
Grocery items have been selling so robustly that manufacturers don’t need to discount anything to generate sales. That has led to higher prices on some products.
“Consumers were definitely paying more during the months of May and June in the grocery store on a per-item basis,” said Rick Shea, president of Shea Food Consultants, a Minneapolis grocery and consumer packaged goods consulting firm. “We think that will kind of continue until the COVID effect lessens. ... In general, we’re still looking at higher prices for at least the remainder of 2020.”
Manufacturers have cut back on promotions that they normally use to drive sales, Shea said.
“If you are (a manufacturer) still trying to get your supply chain to catch up, it doesn’t make any sense to go to a twofor-five or two-for-four pricing to try and promote your product.”
Over time, as manufacturers and processors have adjusted, prices have tended to become more stable.
One example is meat, the prices of which shot higher as processing plants were forced to shut down because significant numbers of their employees contracted COVID-19.
“The meat prices have calmed down ... once meat processors figured out how to process without getting all their employees sick,” Fox said. “The pricing part has settled down.”
Variety tends to be shrinking
Another COVID-19-related impact on the grocery business that consumers may notice is is less variety in certain products going forward.
That’s because manufacturers have shifted to producing only their bestsellers. The situation is a result of running at full capacity to meet demand.
“We hear that companies are ... running full out seven days a week,” Shea said.
Production lines that might have been making items that had less-thanstellar sales have been switched to the products that had been flying off store shelves.
“You are getting less variety as they respond,” Shea said. “That has allowed food manufacturers and processors to move more product through the pipeline.”
Balistreri is watching that situation, too.
“It will be interesting to see — and I don’t have a prediction on this — whether companies will use this as an opportunity to rationalize the number of items they are carrying,” Balistreri said. “They are probably starting to realize that there are some items that they have been producing that just aren’t helping them. And they may decide not to go back to producing those items.”
Shea says he is already seeing that in the marketplace.
That doesn’t mean there are shortages.
“There are plenty of things available for people to buy,” Fox said. “It just may not be the exact brand or item they want.”
Grocers still looking for workers
Meanwhile, amid dire unemployment numbers, Bridwell said the Roundy’s distribution center is still looking to hire at least another 100 people to meet demand.
“We believe demand will continue to be strong,” Bridwell said. “We’ve added more than 100 people since March, and we still need 100-plus more.
“We need people to help us fill those orders for our stores.”
The jobs start at $19.30 per hour, plus benefits. Many of the positions are represented by the Teamsters Union.
“These are permanent positions,” Bridwell said. “It is not part time and not temporary. These are positions we fully intend to keep.”
Sendik’s, too, is hiring, Balistreri said.
“We do have some key positions that are open that we would like to fill,” he said.
“We have hired a lot of people,” since the pandemic began, he added.
Where all of this eventually ends up is anyone’s guess.
“Everybody’s looking trying to figure out what the new normal is,” Shea said. “It’s a crazy time.”