Grocery stores to struggle with tight supplies throughout summer
Grocery stores have been facing supply shortages this summer, which was notable as shoppers sought groceries for their cookout over the Fourth of July weekend.
Brandon Scholz, president and CEO of the Wisconsin Grocers Association, said due to being more removed from the pandemic, there is an overwhelming demand from customers that the supply cannot keep up with.
“We’re in a supply shortage situation,” said Scholz, adding, “grocers are not able to get all the food they ordered from their suppliers and that’s why you see empty shelves.”
Shopping trends are also changing, Scholz said. In 2020, consumers were purchasing a week’s worth of groceries. Now, customers are going to the grocery stores more often and may not buy all at one time, he said.
Big gatherings, especially during Fourth of July festivities, created more of an impact on the supply chain. Grocery stores saw more empty shelves and foot traffic, similar to 2019. The supply shortage is expected to continue for the remainder of summer, Scholz said.
As smart shoppers, customers still looking for food recognized the need to be flexible with purchases, said Scholz. Customers may have to purchase a private label compared to a national brand while looking for bargains.
“(Customers) are looking to try and mitigate the over 8% inflation impact on food prices,” Scholz said. "Grocers and their customers are pretty resilient, and they are able to make a go at it for what they have.”
Inflation is the highest it’s ever been in four decades, meaning that price increases are higher than they ever been, Scholz said.
Grocery stores are not only adjusting their prices, but they must adapt to their suppliers' costs. Those increases passed on up and down the supply chain. Whenever the supplier increases their cost, the grocer passes it onto the customer as their margins are not high enough to take that hit, said Scholz.
Increasing costs and impacts
The cost of operating a business has increased. Both grocery stores and suppliers are finding challenges in retaining and finding a talented workforce.
With higher prices continuing to be the norm for awhile, Scholz says customers have grown into smarter shoppers due to the pandemic.
Ways to save money may include buying a smaller weight item, seeking sales and building a list, Scholz said.
Another challenge facing grocers is the increased demand for fresh products.
“We’re seeing a greater drive for fresh products than we have ever seen before, which has been consumer driven,” said Scholz. “I think the amount of support for buy local is at its highest point ever.”
While buying local includes produce such as sweet corn, strawberries and other farmers market foods, it also includes products manufactured in Wisconsin, said Scholz citing examples of sales for Emil’s Pizza in Watertown and Silver Spring Foods, a subsidiary of Huntsinger Farms, a horseradish grower in Eau Claire.
The local movement has grown a great deal over the past 15 years thanks to the support from the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP), Scholz said.
Since 2008, DATCP has funded 90 projects, totaling more than $2.6 million through the Buy Local, Buy Wisconsin Grants. This year DATCP funded 12 Wisconsin companies' grants totaling $300,000.
“We are pleased to offer these grant opportunities, which support the diverse sectors of Wisconsin agriculture and help Wisconsin communities gain access to more local foods,” said DATCP Secretary Randy Romanski in a press release. “The grants help reduce marketing, distribution and processing hurdles that impede the expansion of sales of Wisconsin food products to local purchasers.”
Scholz says the addition of local products has helped stores keep their shelves stocked.
“When (grocery stores) are getting 60% of their (order) from their supplier, if they can backfill that with products that they get elsewhere including locally, that’s great.”
While factors continue to affect the supply chain, shoppers must remain flexible in their buying decisions as a key way to keep the grocery bill affordable.