NGA’s “Five Questions” is a regular feature that explores the insights of independent grocery operators. This week, John Derderian, president and COO of Allegiance Retail Services, shares his thoughts with us.
- How is 2021 treating independent operators so far?
Year to date, 2021 has been like a party – the first two months feeling very good, perhaps imbibing too much; since cycling last year’s COVID sales surge (second week of March), a bit of a hangover – not unexpected, but queasy just the same.
- Other than adapting to the post-pandemic “new normal,” what factors will be most important to our industry?
What will be important to the industry, and particularly independent operators, is to maintain some of the goodwill we achieved in 2020: e-commerce, increased average basket, increased loyalty among shoppers and the palpable feeling of community among consumers and store associates. Clearly, there will be challenges to maintain the level of goodwill we received in 2020, but our goal as an industry, and as local retailers, is to transition as many of these new-found (or new loyal) customers into lifetime consumers – seizing the initiative and momentum from the well-capitalized, non-conventional supermarket outlets that have encroached on our business.
- What are the most significant collaboration opportunities for independent operators in the months ahead?
As simple as it may sound, I think re-engagement with our trade partners. The pandemic has necessitated excluding direct-sales representatives and brokers from our offices, and trade shows have all but ceased to exist. Although we have become acutely proficient at virtual meetings and trade show meet-ups, it is not the same as old-fashioned face-to-face meetings.
Among the opportunities of a renewed in-person meeting environment with our vendor partners is to re-establish more consistent trade promotions, either clawing back promotions that were withdrawn due to supply issues or developing a more regular cadence of promotions. Strategic planning and aligning goals with our vendor partners seem more comprehensive and sustainable with in-person discussions. In my view, face-to-face meetings still foster a more collaborative environment to virtual meetings, even after a year of industry personnel honing their skills online.
- What are the most significant challenges?
Three months into the new administration, I am very concerned about a return to an atmosphere of almost casual government overreach, in the form of regulations and mandates, both at the federal and, now, the “‘empowered” local level. The return to an unfriendly business environment illustrated by mandated hero pay and rapid-fire onerous regulation is, and will be, profoundly impactful to independent operators.
As an example, think about the impact a state regulation (e.g. minimum wage) can potentially have on an independent retailer, which may have its entire operation in one state, making it incredibly difficult to economically rebalance this regulation since it does not operate in multiple states, all with different wage structures.
- How do you envision the year ahead unfolding for independent operators?
On a micro level, we will all have to grapple with inflation, which, based on the ongoing printing of money by the Fed, will become a reality. Low single-digit inflation is often good for our industry, but I envision accelerated inflation and a move toward value shopping.
On a macro basis, I think fiscal year 2021 will be a watershed year for independent operators in which three results may occur:
• Successful independent operators will recognize the benefits uncovered from the pandemic sales surge and operationalize them into their everyday go-to-market strategy.
• Others will revert back to their operations prior to the pandemic, perhaps incorporating some learnings, and will achieve basically the same performance metrics (successful or unsuccessful) they had prior to 2020; and,
• Unfortunately, still others will neglect to make the necessary changes demanded by today’s consumers and will fail.