In keeping shelves stocked, small, ethnic grocers have an advantage
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Grocers of all sizes have been scrambling to keep up with demand throughout the coronavirus crisis. Now, many smaller stores and grocers that cater to specific communities are relying on their biggest advantage to keep their shelves stocked: flexibility.
Smaller grocers tend to rely on a loose network of suppliers and distributors. Those networks enable smaller grocers to quickly change suppliers if demand for a particular product spikes.
Imagine a rope running from a grocery store shelf to a food manufacturer. That rope is the grocery store supply chain, and in a time like this, it’s important for that rope to have slack.
“In times of crisis, tight breaks,” said Pat Whelan, who runs the warehouse for the Brooklyn-based grocer Sahadi’s. It specializes in Mediterranean foods, including preserved lemons from Morocco, tahini from Lebanon, Halloumi cheese from Cypress.
The flexibility to quickly swap out suppliers is one definition of “slack” in a supply chain. When one of Sahadi’s longtime suppliers of Jordan almonds shut down a few weeks back, Whelan managed to find a new source over a weekend.
“It was just a few phone calls, boom, boom, boom — new supplier,” Whelan said.
Hawaii Supermarket, an Asian grocer near Los Angeles, recently had trouble stocking Gold Medal flour. General manager Chris Duong said he kept his shelves stocked by switching over to a Korean brand.
“People don’t really care, as long as they are able to get a product,” Duong said. “There’s no such thing as brand loyalty now.”
While smaller grocers have a lot of options, they don’t have the negotiating clout of a Walmart or a big grocer. And in normal times, that puts the small grocers at a competitive disadvantage.
“Supply chains that have excess inventory aren’t nearly as efficient in regular times,” said Dale Rogers, a professor of supply chain management at Arizona State University. “But in strange times like what we’re in now, [smaller grocers] actually are better positioned to respond.”
Rogers says big, national stores (e.g., Walmart, Target) have spent decades removing slack from their supply chains, turning them into tightly managed machines that deliver precise amounts of products just in time to meet customer demand.
It works as long as demand is predictable. But when demand shoots up, the system can falter.
“When there’s a big run on things like Campbell’s soup, they have a hard time keeping up with that demand because of how much we’ve tightened supply chains down over the last 25 years,” Rogers said.
Smaller food suppliers have a similar advantage when demand increases: they can ramp up production faster than their big competitors.
Vallarta Supermarkets, which has 50 Latino-focused stores throughout Southern California, has been turning to local suppliers to keep its shelves stocked. In recent weeks, those have included a local juice manufacturer and paper products company.
“Being local, being in touch with your community, and what their needs are from a day-in, day-out basis, just makes you a lot better suited to react to something like this,” said Andrew Lewis, an executive with the chain.
Each of Vallarta’s stores manufactures its own tortillas. Lewis says the chain’s been ramping up production to meet customer demand.
COVID-19 Economy FAQs
What are the details of President Joe Biden’s coronavirus relief plan?
The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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