Retailer Roundtable: A year into COVID-19
The Produce News interviewed seven retail produce executives from across the country on the experiences of the COVID-19-influenced year and where the industry is a year later. Their answers have been condensed and paraphrased for brevity, clarity and to fit the format. The participants were: Gabe Flores of Bashas, Chris Keetch of The GIANT Co., Price Mabry of HAC, Vince Mastromauro Jr. of Sunset Foods, Mike Roberts of Harps, John Savidan of Gelson’s and Jeff Tomasetti of Buehler.
What was the biggest impact on your retail produce business during COVID-19?
John Savidan: Initially the largest impact was really keeping up with the huge spike in the business compared to the normal daily operations. The first week the pandemic hit we literally had departments turning roughly 90 plus percent of their daily inventories and starting from ground zero daily. As a team we had to react and switch gears faster than we ever had.
Chris Keetch: End-to-end supply chain was the initial challenge. Between finding enough product and then enough trucks to keep shelves stocked, the produce team worked 24/7 for several months to keep up with customer demand.
Vince Mastromauro Jr.: The biggest impact was maneuvering through the ebbs and flows of supply and demand. Pandemic buying did benefit some produce items, most notably the root vegetables, such as carrots, potatoes and onions. The first couple of months were unbelievable with the craziness of hoarding impacting our supply situation. We closed down our salad bars and expanded our bagged salads line. Salads took off. The fresh-cut section also took off.
Gabe Flores: By far, the biggest challenge we experienced was keeping up with produce stock levels and varieties. Transportation of goods became an extreme challenge initially, followed by a large impact on the overall workforce within the industry. That was met by the need for a sufficient workforce to meet the high demands of consumers. These challenges continue to this very day.
Jeff Tomasetti: Initially, we lost a number of employees who were too scared to work. We had some product shortages and did everything we could trying to keep the shelves stocked, including buying SKUs that we had never carried before. It took three to four months to return to some normalcy. We started off busy and stayed busy. We did see an increase in packaged and bagged items. Consequently, we started bagging and packaging anything that we could. We saw sales increase and profits increase because there was such a high turn that we had less shrink, which meant better margins. We had about a 10 percent increase in produce sales in 2020 compared to 2019.
Mike Roberts: The biggest impact was just trying to keep the shelves full. From day one, we had supply chain issues that kept us scrambling for a couple of months. Initially, the best sellers were potatoes, carrots and onions, but we also had many other items that did very well. Squash sales were off the charts; herbs went through the roof; and citrus sales spiked like never before. Early on I was calling every potato shipper in the country to fill my shelves. One guy told me he only had 40-count bakers left. I took a load of them; we took the tops of the boxes and we sold the load in about a day and a half.
Have produce sales returned to a normal level?
Price Mabry: Initially, commodity items such as citrus, potatoes and apples did very well during the pandemic, and they are still doing pretty well. But over the last few months, the salad category has just taken off. We are seeing increases of 10-20 percent on the entire category. I attribute it to people still not comfortable going out to restaurants. People are still cooking at home. We are handling it by making sure we are keeping our shelves stocked.
Mastromauro: Produce sales are still hitting the high notes. We were a little bit down in April 2021 compared to 2020, but we are still doing very well. Customer counts are up. We took a lot of effort to make sure our stores were clean and well-organized so shoppers could get in and out during the pandemic. I think that worked to our advantage as shoppers felt comfortable coming to our market and we have kept some of those customers.
Savidan: We are very pleased with where our fresh produce sales are post-pandemic. Although sales are not as high as they were a year ago, they are only a single-digit percent down for the year. We have been very fortunate to have been able to retain the new customers that visited our stores during the pandemic and now have found it their go-to neighborhood market.
Roberts: A year later, many items are still double-digits over 2019. Convenience foods and bagged items are still selling really well. Salads have taken off. The category has outpaced any expectations we might have had.
Keetch: Sales are still very strong, and I believe that shopping patterns have changed for a longer-term timeframe as the economy finds its new normal. A broad swath of the population has been at home for an extended period, during which they learned to prepare and serve new recipes and meals at home; it seems that they have adapted on an ongoing basis, even with food service/restaurants open.
Flores: Pre-pandemic days seem to be behind us, yet we continue to face some of the same issues we did at the height of the pandemic. We continue to learn what the new normal will be. We have seen less foot-traffic and fewer visits to stores coupled with increased and higher volume purchasing. Without a doubt, we witnessed a hard spike in pre-bagged produce. Although the increase in volume continues to be elevated vs. pre-pandemic, the initial hard spike has softened a bit during the last few months.
Tomasetti: Moving forward, we are going to grow this year. We are going from 13 to 14 stores with the newest store currently being built. Our goal was to open it in June but that has now been pushed back to September.
How did organic produce sales do during the pandemic?
Savidan: Growing organic itemization has been a top initiative of ours the last few years, so we were charging very hard and strong on organics with solid double-digit growth prior. We have been able to hold on to a lot of the erosion which we can more than likely attribute to the pandemic.
Roberts: This is probably the worst place in America (South/Midwest border states) to sell organics. They are not a big driver for us, but they did increase during the pandemic. I’m not sure if that’s because people were looking for organics or they were just buying anything we had on the shelves.
Mastromauro: Organic produce sales increased across the board. We are still above pre-pandemic levels. It was all items but especially the most popular vegetables such as broccoli and cauliflower.
Mabry: Organic produce is gaining sales, especially in our stores in the urban areas. We are upping our game in about 10 of our stores shifting gears and creating a high-profile section for organics. We want suppliers to know that we are a player in the organics game. We are carrying only organics in several SKUs such as the hard squashes, and one-pound carrots. If a customer wants conventional bagged carrots, they have to buy the two-pounder.
Flores: Organic produce sales were yet another significant hard spike that we witnessed through the pandemic. Organic produce will continue to be popular; we continue to see elevated sales in this area.
How have on-line sales fared during this past year and where are they now?
Keetch: Online grocery shopping has become the new norm and we continue to see demand for GIANT Direct, our online grocery services, both for delivery and pick-up. We continue to invest in and enhance our e-commerce platform as part of our omni-channel strategy. Our new e-commerce fulfillment center being built in Philadelphia provides more capacity, faster order fulfillment and room to grow home grocery delivery, in response to the increasing number of customers who want to order online.
Tomasetti: Online shopping immediately and dramatically increased. It grew 50 percent almost immediately. It has backed off a bit as things have reopened, but it is still registering a big increase compared to before.
Flores: As a company, we invested significant resources into growing our store delivery and pick-up operations throughout the pandemic. There is no doubt the pandemic helped to speed up consumer interest in these services.
Roberts: At the time of the pandemic, we were just starting the process of online shopping. It took off like a rocket and set records all year long. People learned how to do it and our online sales are still very good.
Savidan: The pandemic afforded us the opportunity of such wonderful sales, but really challenged us on what we needed to improve on to sustain the business. The online platform is here to stay and it’s our job as upscale retailers to make sure we give the customers the same quality and assortments as if they were shopping in our stores in person.
How difficult has it been to keep your stores staffed and hire new workers as we move toward post-pandemic America?
Mastromauro: We pruned a little bit at the offset. Now, it has been difficult to find good people. There are more jobs out there and good people can be more selective.
Mabry: Employee staffing is a huge issue. If it wasn’t for our core people, I don’t know what we’d do. If you need a job, come to us; we’ll hire you. Workers have many options right now and it is difficult to find people to take the jobs we have.
Roberts: We are not even close to being fully staffed. We are struggling. I have 113 stores and I’d say I could hire 75 more people tomorrow and still be understaffed.
Tomasetti: Staffing is harder than it has ever been. Young people do not even look at the employee-owned concept (ESOP). It doesn’t mean anything to them. In today’s market it is very difficult to find people to work in our stores. It is a big issue.
Are you back working in the office, seeing vendors face-to-face and traveling again to produce shows?
Roberts: We never worked remotely nor stopped seeing vendors. We figured as long as our workers were in the stores, we were going to be in the office. We set up a lot of rules and regulations for being in the office and thought it was important to set a good example for our stores. Not too many vendors wanted to visit but if they came, we saw them. We have been attending the shows that have taken place this year and will continue to do so.
Flores: As of June 4, we are still facilitating meetings virtually. While virtual communications presented quite a learning opportunity at the start of the pandemic, they have proved to be quite efficient and have not impeded business in any way. If anything, it taught us a number of different efficiencies, which is a great thing.
Savidan: At Gelson’s we are still not seeing any suppliers face-to-face or have any of us engaged in any in-person outing events or trade shows. First and foremost, our leadership team is still very concerned about all customer and employee safety and more than likely waiting for more direction from the CDC (Centers for Disease Control) and the Governor of California before lifting any of our restrictions.
Mastromauro: We are in the office and we are seeing vendors. Soon we will be traveling again and going to shows.
Tomasetti: Most people that were able to did work at home, and we are going to continue to allow people to do that at least a couple of days a week. We opened up our office a month ago to vendors.
Mabry: We are back in the office but working remotely has shown that we can do it and be successful.
I spend a lot of time in the stores now and that can be productive as well. I can work from a store remotely just like I can work from my home remotely. As far as vendors are concerned, I’d like to keep those visits as Zoom calls. It’s great to see vendors but it’s more productive to have a 15-minute call via Zoom than an hour call in the office. If they come to the office, I feel like I should give them an hour because they made the effort, but we probably only talk business for 15 minutes. I’m not encouraging vendors to come see me.
What’s your takeaway from the past 15 months?
Roberts: The last year was the most challenging time in my career and on top of it, as the pandemic started, we purchased 25 stores and had to convert them during COVID-19. It was a challenge and we had to get creative even to eat when we traveled to those stores during their openings. I had to say ‘I don’t know’ more times in the last year that in the rest of my entire career.
Mabry: In 2021, we have to get back to basics. You can’t just throw the produce out there and expect it to sell like during the pandemic.
Savidan: My biggest takeaway was what we as a team were able to accomplish together under those times of fear and uncertainty. Our business went from normal to 100 miles an hour overnight. If not for the collaborations and trust and supplier resilience, we would not have been able to accomplish what we did.
Flores: The sheer courage the entire fresh produce industry immediately displayed at the very start was an incredible thing to witness and be a part of. The entire supply chain showed no fear or failure. It is an honor to be part of an industry that will stand up to do its part in feeding the world.
Keetch: The produce industry proved its resilience, both in the immediate height of the pandemic and in the time since. Our ability to keep produce stocked is a testament to the strong relationships we have with our suppliers and our dedicated produce team both in the stores and support office.