From COVID to Product Shortages to Labor Supply, Grocery Stores Adapt To String of Challenges

As one of the world’s largest independent grocery store franchises with more than 6,000 stores located across the world, IGA has some unique insights into how the COVID-19 pandemic has changed things in the world of retail. And those insights could prove vital for the company’s future growth as it moves into the post-pandemic era, IGA President and CEO John Ross believes.

In an interview with PYMNTS, Ross admitted grocery stores have been lucky to an extent with the ability to stay open during the pandemic, compared to so many other ‘non-essential’ businesses around the world that were forced to shut down or curtail operations.

“We’ve seen more commonality of effects in our stores than not, whether that’s in China, a block down from where the crisis began in Wuhan, to our stores in the U.S.,” said Ross. “It has been a truly global crisis with hoarding activity by consumers, supply challenges and having to be a kind of mask police, all the while having to figure out how to maintain prices and service delivery when both labor and products are in short supply.”

A World of Challenges

One of the toughest challenges IGA has faced has been recruiting enough workers to keep its stores open at a time when employees are increasingly worried for their safety.

Read more: Digital Lessons from Main Street’s 2021 SMB Survivors

Ross said IGA’s own research came up with some surprising reasons why people no longer want to work in grocery stores. While the issue of safety ranked fairly high, he said the number one reason people are avoiding grocery stores is because they are looking for a better job.

“COVID has given them the opportunity to reflect on what they really want out of their work experience,” he said. “They want to work for a company that’s making a difference in their community, someone that’s giving back and takes on issues like food waste and reducing plastic. Ironically most Grocers do this, but we just aren’t really doing a very great job telling people about it.”

Grocery stores can be excused for that lapse given the mountain of problems on their plate. Hogging the headlines for months on end is the ongoing supply challenges that has affected almost every kind of business.

IGA’s stores have typically enjoyed 98 percent fill rates in terms of deliveries, which means they’re hardly ever lacking in a particular type of product on the shelves. Ross said it used to be that store managers would get upset if the fill rate ever dropped a couple of percentage points. But nowadays, most of IGA’s stores are seeing fill rates of 68 percent to 70 percent, he said.

“There’s a constriction of supply that’s very deep, everything from raw materials like aluminum, printing capacity and labels to things like imported goods,” Ross said.

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That’s not to say it’s entirely bad news. The shortage of goods has actually increased demand at most IGA stores, and the company has seen “spectacular growth” in its bottom line over the last two years. But Ross believes the company’s growth could have been even stronger if not for the impact of supply challenges. He noted that as a chain of independent retailers, his company’s stores are further down the pecking order in terms of their relationship with certain manufacturers, so they’re probably not getting their fair share in terms of inventory.

“So the other question you look at is, if we had everything in stock, how good could we be?” Ross asked.

Being independent does have some advantages though. One of the ways IGA has learned how to compete is by stepping up its investment in consumer-facing technology, digitizing the customer experience to offer a more personalized service to its customers than larger rivals can do.

“As an independent that competes on quality and customer service, we’ve had to figure out how to take the attributes of personal touch and local supply, and then bolt them on to a more global medium like eCommerce or the internet,” Ross said.

IGA has figured it out pretty fast too, the CEO believes. For example, if a customer orders steaks from one of IGA’s stores, then one of its employees can take a picture of the various juicy cuts of meat it has on offer and ask which one the customer would like. Plus, it will follow up with shoppers afterward to ensure they’re satisfied. These are things a company like Amazon can’t really do, Ross said.

“This combination of rethinking our value proposition and the investment of digital technology, we call it forming a digital relationship with the consumer,” Ross explained. “If we can connect to them in that powerful way online, the total loyalty proposition is so much better and that preps us to compete in the long run, whether it’s against Kroger, Safeway or Amazon.”