Warm Southern Breeze

"… there is no such thing as nothing."

America’s Grocery Supply Chain Is Healthy

Posted by Warm Southern Breeze on Monday, March 23, 2020

With COVID-19 cornoavirus proliferating in the United States, and abroad, some grocery shoppers have begun panic purchasing. That behavior is not limited to Americans. Shoppers in other nations have also begun to panic purchase, which in turn, makes it difficult for those who genuinely need groceries to obtain them.

And at least one story has been published about people not being able to purchase much-needed food items, including one about a 51-year-old Critical Care Nurse in England who, after a 48-hour shift, wasn’t able to find any groceries for herself.

“Just stop it please”: Tearful Nurse urges the public to stop panic buying food after she was unable to buy basic items following a 48-hour shift.

Top Out of Stock Categories of grocery store items

There are other readily-observable phenomenological (def. a “method of inquiry concerned with the perception and experience of objects and events as the basis for the investigation of reality”) matters, and events, at work. One such matter is the “80-20 rule.”

Also known as the Pareto Principle, after the Italian economist and sociologist Vilfredo Pareto (1848-1923) who first described it, the rule, or principle certainly applies in this scenario.

Simply put, as it applies to consumption, the rule states that 80% of your product sales will come from 20% of your customers – or, if you prefer, 80% of consequences come from 20% of the causes, which thus asserts an unequal relationship between inputs (cause), and outputs (effect).

The 80/20 rule is borne out also by anecdotal observation, in which an Assistant Grocery Store Manager recently remarked to me that, “There are others who can’t buy things, because the same people are lining up at 6AM when the truck arrives and are buying basketfuls of the same things every time,” adding that, “It’s obviously way more than they need.”

Or, to put it another way, the suffering of 80% of the people who don’t have access to regularly-purchased items, is caused by 20% of the population. Things like that kinda’ gives you pause for thought, doesn’t it?

Further anecdotal evidence may be found among shoppers themselves, who report similarly, which is that a relatively small number of people are purchasing an inordinate quantity of select items, whatever they may be, and thus rapidly depleting available stock and inventories.

Kroger Spokesperson, Melissa Eads in Nashville, TN said that since Thursday, March 12, 2020, Kroger stores have seen a significant increase in the number of customers, and the quantities they’re purchasing. Kroger grocery store officials estimate that most customers are buying at least five times what they would normally buy.

And to buttress the idea that America’s grocery supply chain is safe, and secure, Greg Ferrara, President & CEO of the National Grocers Association has written that, amidst a national profusion of panic purchasing, that:

Food supplies are plentiful throughout the supply chain and are being replenished continuously to meet the demand. Although some consumers may experience temporary out of stocks in some categories or brands, such as hand sanitizer and paper goods, stores are re-filling shelves as quickly as possible. Supermarket associates are working diligently to quickly restock shelves and clean stores. And, while consumers may find purchase limits on some products that are in high demand, such as toilet paper and cleaning supplies, this is simply to ensure as many customers as possible are able to purchase what they need.”

But since when do people give heed to sound advice, eh?

After all, it was a Wisconsin Republican Congressman and Johnny Carson who were the cause of the “Toilet Paper” shortage scare in American, dating back to December 1973… and hasn’t shown any signs of letting up.

Following are industry observations about the grocery industry – or, more accurately as Consumer Behavior – in relation to COVID-19.

Observations and Implications

OTC

Consumers are focused on boosting their immunity to fight COVID-19. Vitamins, supplements, probiotics and other immune-boosting products will be in demand. Preventive health care products, such as vitamin C, are trending higher than symptomatic products.


FOOD

While pasta has benefited from panic purchases, anecdotal evidence shows lasagna sheets remain on the shelf, as more labor-intensive meals may not be on the menu.

Convenient meals will be in demand.

In-home food and beverage will increase significantly, resulting in both increased consumption and pantry stocking. Out-of-home food consumption will take a hit as travel comes to a halt and people work at home more.


NON-FOOD

Work-from-home and restricted socializing can result in consumers using fewer cosmetics and haircare products.

Household cleaning products are experiencing increased purchase patterns. Manufacturers can expect product sales to taper significantly as it will take time for consumers to use abundance of products recently purchased.

Top Growth Categories grocery store items

SHOPPER BEHAVIOR

Food delivery, click and collect, online shopping and home delivery will increase as consumers avoid going to areas where there are large gatherings.

Click and collect and home delivery must be every retailer’s business priority, as long-term shopper behavior could change.

Cocoon-stocking will reflect household makeup, with indulgent items, such as DVDs, confections, salty snacks and alcohol sales increasing; however, spring holiday shopping may take a hit.


SUPPLY CHAIN

Out of stocks are likely across high-demand categories; manufacturers will focus on production of top SKUs to meet demand; expect fewer options but satisfactory supply levels of most in-demand products.

Stockable items continue to be very popular with consumers (besides obvious ones like sanitizing wipes), e.g., shelf-stable and frozen food items, sports drinks, water, toilet paper, etc.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

 
%d bloggers like this: