August 2020 Impact Assessment
About NGA Foundation
The NGA Foundation is the 501(c)3 non-profit arm of the National Grocers Association which provides independent retailers with tools to develop more effective recruiting programs, enhance retention efforts, and bolster professional and leadership development opportunities for employees.
Impacts of COVID-19
Positive:
- High demand has led to large increases in sales
- Increased consumer confidence in independent/locally owned retailers vs. large chains
- Retail workers feeling more valued
Negative:
- Strained supply chain
- Operational complexities and increased costs related to COVID protection (legal, sanitation etc.)
- Labor challenges
- Increases in labor costs and difficulty hiring enough employees to meet demand
Obstacles to Sector Response
At the outset of the pandemic, grocers were hit with panic buying from consumers – this and other factors including outbreaks in processing/distributions centers has led to a strained supply chain which continues to be an issue. Although grocers were able to fill supply chain gaps with non-traditional sources – I.e. locally sourced products and restaurant distributors – price and format differences in these products from alternative distributors led to pricing and merchandising challenges for store operators. Increased demand also exacerbated existing labor shortages throughout the supply chain. In order to stay open, retailers must comply with ever changing safety rules/regulations that vary in local/state/national contexts. Ultimately despite benefits to the independent retail sector, there is still tremendous uncertainty around consumer behavior and supply chain resiliency. Retailers will need to continue to be nimble and flexible in their decision making.
Successful Marketing Adaptations in Response to COVID-19
The market disruption due to COVID-19 provided an opportunity for smaller independent grocers to highlight their role as the community grocer and stand out against larger chains in their response. Independents were able to provide more real time updates on product availability through social media channels and promotion of locally sourced items. Independents were able to highlight collaboration with local restaurants or farms in the community. In one case a grocer appeared on a local weekly radio show with updates on the availability of products like cleaning supplies, paper goods and other highly sought items. Grocers have needed to ramp up communication and promotion around ecommerce services. In one case a retailer produced a series of YouTube videos that took consumers through the step-by-step process of how e-commerce orders are filled. There’s also been an increase of mobile app downloads – lots of grocers have either launched their own apps that incorporated an e-commerce component and or provided a way for them to serve up digital ads to customers or provide in-store information, and even expand loyalty programs through the app. And, in-store events obviously halted, so we’ve seen a shift in the marketing from in-person to “at home” celebrations.
Economic Impact on Sector
- Suppliers: Many independent grocers were able to keep their shelves stocked better than larger chains due to flexible decision making and access to local suppliers and restaurant supply chains. The pandemic led to an increase in cross-sector collaboration as grocers looked to form new relationships with farmers, produce suppliers, food service suppliers and restaurants.
- Consumers: In addition to overall increased demand and higher consumer confidence in small format stores vs. National chains, grocers are experiencing higher sales with lower customer counts, due to a willingness to buy in bulk and/or pay more for what they need. Rural stores are also benefiting from local shoppers who, pre-pandemic, tended to visit cities and megastores for their regular shopping and are now staying closer to home. Increased e-commerce has also brought new consumers for some retailers although this comes with numerous costs and challenges to start up and staff.
Impact on Sector Members
Smaller stores in areas with lots of competition could be impacted, especially if they are having issues getting adequate supply vs. their competitors. Fostering connections with suppliers on a local basis could help ensure smaller stores are able to keep up with competitors who have larger corporate buying power.
Desired Data and Technical Assistance
Data:
- Sharing of operational information and best practices within our industry
- New marketing and merchandising ideas
Technical Assistance:
Help creating e-commerce solutions for smaller stores. With large chains investing heavily in-home delivery and e-commerce, smaller retailers are scrambling to keep up. How can they create efficient solutions and differentiate from the competition?
Contact Information for NGA Foundation:
Maggie White mwhite@nationalgrocers.org
