Mon | Nov 29, 2021

Changed retail dynamics, higher grocery prices after lockdowns

Published:Wednesday | September 22, 2021 | 12:05 AMKarena Bennett - Business Reporter
Derrick Cotterell, Chairman and CEO of Derrimon Trading Company, operators of Sampars and Select Grocers supermarket chains.
Derrick Cotterell, Chairman and CEO of Derrimon Trading Company, operators of Sampars and Select Grocers supermarket chains.
Cathrine Kennedy, general manager of Hi-Lo Food Stores Limited, a GraceKennedy subsidiary.
Cathrine Kennedy, general manager of Hi-Lo Food Stores Limited, a GraceKennedy subsidiary.
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The world over, the dynamics of retail are changing, thanks to COVID-19. Supermarkets in Jamaica, too, have been forced to adjust their operational routines, some for the better, as a result of pressures brought by the pandemic in general, and more recently, four weeks of government-imposed weekday lockdowns, dubbed ‘no movement days’, that were discontinued a week ago. The bulk of the population remain confined to their homes on Sundays and public holidays.

But price rises for food and other grocery items continue to be an unwelcome feature of the times.

Closer collaboration with farmers and fresh food vendors and distributors to enable more regular produce deliveries to grocers; as well as stocking at least 10 per cent more inventory; and ensuring more flexible roster management of staff, are among the actions supermarket owners and managers have had to take in response.

Unusually heavy customer traffic just before lockdown days, panic buying, supplier shortages, hoarding and production downtime are among the strains that grocery retailers have had to contend with. Now, in addition to new answers found on the pandemic learning curve, they are also drawing on lessons from natural disasters, such as hurricanes and tropical storms, to fashion their response.

For big grocery chains like Hi-Lo Supermarket, which is supplied specific items by associated Grace Foods, the supply of some items may be sure, but for other items, it’s a more intense jostle with competitors for the supply of large quantities of dry goods, agricultural produce and meats from distributors.

MUTUALLY BENEFICIAL

“As one of the largest supermarket chains on the island, Hi-Lo has worked very hard over many years to foster mutually beneficial relationships with distributors and our other vendors. During periods of restricted movement, we make it a priority to communicate with these suppliers more frequently,” general manager of Hi-Lo, Catherine Kennedy, told the Financial Gleaner.

The relationship with distributors is a mutually beneficial one. It is important for distributors to have their brands and products well represented on the supermarket shelves and for grocery trades to have in stock the products consumers need.

The work to get fruits and vegetables on supermarket shelves is no different. Derrick Cotterell, chairman and CEO of Derrimon Trading that operates grocery chains Sampars and Select Grocers, says the company has been ordering fruits and vegetables from local farmers more frequently. That’s more fresh produce available throughout the week for consumers, who appear to be cooking more too.

Before the pandemic, supermarket owners say, consumers were shopping heavily for conveniently packaged foods to prepare before heading into the office and after getting home from work. Not so any more. Now consumers’ baskets are part filled with fresh produce, frozen foods and so-called shelf-stable products like canned foods.

“This is a global trend which we are also seeing in our stores,” Hi-Lo’s Kennedy said.

CONSUMER DEMAND

Pre-COVID, fruits and vegetable orders would be fulfilled twice per week, but now, Cotterell says, his stores are stocking up to 10 per cent more items to fill consumer demand for farm fresh goods.

“What many people don’t realise is that the vegetables that you are getting in the supermarkets is a lot fresher than the ones they’d get in the market. Retailers should really take a bow for managing this pandemic so well,” Sampars and Select Grocers boss said.

The pressure had been mounting on the retailers, according to MegaMart CEO Gassan Azan, with the tightened curfew hours on Fridays and no-movement day lockdown Sunday through Tuesday for the past month.

As an essential service, the supermarket trade is authorised to receive goods from suppliers and make deliveries to customers on designated no-movement days. The supermarket managers say they hold, on average, one week to a month’s inventory, depending on the items, and Fridays were normally the designated days for fruits and vegetable stocking. But stocktaking had been hampered by the previous order for some businesses to close midday on Fridays.

With the recent relaxation of COVID-19 protocols, businesses now operate normal hours during the week. Prime Minister Andrew Holness, in announcing the relaxation in a statement to Parliament on September 15, surmised that the lockdowns were working although infections, hospitalisations and deaths remained high. However, with what he described as their “massive negative impact on productivity, on the economy, and on the livelihoods on thousands of Jamaicans”, that option was a price the country could not continue to pay.

Weekday lockdowns or not, there is still the issue of continuing price increases bedevilling the trade. Constant price adjustments from raw material shortages and rising shipping costs have seen retailers’ spend stock skyrocket and the businesses have been looking to recoup the excess spend from consumers through product price increases.

The price of raw materials for packaging, like cardboard and cans, the retailers say, have gone up significantly since the start of the year, with shipping costs increasing as much as fourfold. The fix for retailers has been increased inventory on specific products and a 10 to 20 per cent increase on product prices.

karena.bennett@gleanerjm.com