For the supermarket industry in the U.S., the year 2020 will be recorded as one of the best in terms of sales. The crisis caused by the COVID-19 pandemic has ironically been a determining factor in these results, said Bob Graybill, president and CEO, FMS Solutions, reflecting on the state of the industry and expectations of what might happen in 2021.
However, there is a big question mark about the performance of grocery sales will be for Thanksgiving, Christmas, and New Years.
Traditionally, families travel to reunite with their loved ones during the Holiday season and celebrate together, usually with large dinners. There is a possibility that this year, because of the COVID-19, people will decide not to travel and therefore the volume of grocery shopping for family dinners will be reduced.
The CEO of FMS Solution, a company that provides accounting services and a technology platform designed specifically for independent grocery stores, spoke with Abasto about the changes in the supermarket industry due to the CODIV-19 pandemic and what steps they need to take to keep their businesses running smoothly through 2021.
Interview about the SUPERMARKET INDUSTRY
Abasto Magazine (AM): What does this year’s coronavirus mean for the grocery store industry, and how should they prepare for 2021?
Bob Graybill (BG): Looking at the current year, the transition of people who ate out in restaurants is important, and because of the safety issue they decide to cook at home, the use of home delivery services and one of the big changes will be between the Older people who were not using online services to order their purchases, but due to the risks with COVID-19, will be using the internet to a greater extent to place their orders.
AM: Many independent supermarkets have avoided e-commerce due to the costs of maintaining the platform. What should they do?
BG: In the survey we conduct annually with the National Grocers Association, we see that just two years ago at least half of the independent grocers did not have online solutions, home delivery services, or even delivery of the purchase in front of the store. The COVID has forced many in the supermarket industry to integrate these services more quickly and with the increase in online sales volume, they are beginning to have a profitable business. Those with lower profit margins are using third parties to operate e-commerce services.
RA: Have any grocery stores been forced into bankruptcy as a result of the coronavirus crisis?
BG: What we have seen in the supermarket industry is that on average they were doing well and with the COVID they became stronger with increased sales. It was more of a coincidence that some chain stores filed for bankruptcy at the beginning of the pandemic and it’s because they were already in trouble and not as a result of the COVID because many store owners benefited from increased sales.
AM: Have you seen any noticeable differences in how Hispanic independent stores did this year compared to other retailers, or is everyone in the supermarket industry in the same boat?
BG: It seems to me that everyone is in the same boat to some degree. Typically if you look at the demographics around the country, we look at the Hispanic markets and the Hispanic population, they already tend to cook more at home, so Hispanic retailers have had an increase in their sales, but not at a rate as high as in other stores where customers went to buy more as they were forced to cook more at home.
The other factor influencing the decision to buy more groceries in stores to eat at home instead of spending money dining in restaurants is the unemployment situation. The Hispanic community has seen higher unemployment in the past months than the general level of unemployment in the country.
AM: What are retailers planning to do with the profits they are making from increased sales?
BG: What we have seen in our customer base is definitely an increase in their profits, while there are additional expenses due to COVID for the extra cleaning processes of the stores, the installation of protective barriers at the cash registers, having employees at the front door making sure customers wear masks. Some are using those profits to improve their finances and, in some cases, remodel or expand their businesses.
AM: Is there anything that worries you about what may happen to the independent supermarket industry next year?
BG: The only concern I have is that everyone has a tendency to get drunk and happy when sales increase, and they risk lowering their guard. That’s why you have to keep in mind that when the volume of sales starts to drop, you have to make sure you keep an eye on expenses including labor and it’s going to be very important to readjust when everything returns to normal. Part of the change will surely include reducing the number of staff in the store, but at the end of the day, they will have a higher quality of staff working.