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How Grocers Are Grappling With Inflation

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by Jim Dudlicek / Director, Communications and External Affairs, NGA

A historic period of inflation has pushed grocery prices ever higher as the nation continues to grapple with the coronavirus pandemic. A labor shortage, supply chain issues and other factors are driving up costs, but many consumers, as well as some in high levels of government, just see high food prices amid record profits in the grocery sector.

How are retailers dealing with the rising cost of goods while struggling to maintain reasonable prices for their shoppers? And how are retailers explaining conditions to their customers and helping them manage it?

NGA hosted a recent webinar to explore the issue. Moderated by IGA CEO John Ross, the panel included Mike Davidson, president and CEO of Buehler’s Fresh Foods; Russ Greenlaw, VP of sales and operations at Adams Hometown Markets; and Tim Lowe, president of Lowes Foods.

Ross will be leading a related discussion, “Don’t Be A Victim To Inflation: Simple Strategies To Maintain Price Authority, Increase Sales and Drive Shopper Loyalty,” during The NGA Show, Feb. 27 to March 1 in Las Vegas.

Here are some key takeaways from the webinar discussion:

A perfect storm of factors has contributed to the current inflationary period that saw food prices up 7 percent in December, the highest since 1982. Compounded by the pandemic, inflation is being driven by both supply and demand issues, including a sweeping labor shortage impacting most industries including trucking, as well as shifting consumption patterns.

“We’ve never really seen anything like this before,” Ross said. “It’s a sobering time.”

The end is not yet in sight. “We saw it coming … [but] it accelerated quicker than we all thought,” Davidson said. “It’s something we’ll be dealing with at least for the short term and probably the mid-term,” possibly for much of 2022.

The middle is getting squeezed again. Greenlaw has observed growth at the high and low ends of the market, with the greatest pressure on the middle – much like what occurred at the end of century’s first decade.

Grocers need to help shoppers stretch their food dollar. “If you go looking, you can find some value buys on the open market,” Lowe said, such as volume purchases on some commodities like certain cuts of meat, which has been most significantly impacted by inflation.

Lowe observed that, despite inflated prices, many consumers are still engaged in “pantry loading” due to uncertainty over the pandemic. “We want to help consumers’ dollars go further by helping them think differently about how they spend their dollars.”

As usual, it’s all about trust. “We want to continue to engage our customers,” Lowe said. “We focus not so much on the numbers but on getting quality products to the consumers so they can find value.”

Davidson said there’s a great opportunity for independent community grocers to help their shoppers. “It’s how we can continue to earn their trust,” he said. “The customer couldn’t care less about supply issues – they want what they want, and they want it today.”

To hear all the exclusive insights in this webinar, along with all the webinars in the series, visit https://nga.sclivelearningcenter.com/MVSite/default.aspx.

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