Food Retailing and Our New Fate

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When it comes to retailing, maybe the most unexpected surprise is that food retailing is just about the only enterprise that remains more or less as it was in the B.C. era (Before Corona).

Consumers can still go to supermarkets and other food-retailing venues in person to shop for the goods they need, if they accept the degree of hazard associated with that. They can also order product online. And sales at the major retailers selling food are surging, in a good way. But that doesn\’t mean everything is exactly the same for food retailing and that in a surprising turn of coronavirus events, the future of food retailing looks great. That being said, there are several concerns to consider now:

Up to about this point, we\’ve seen store overcrowding and product shortages, almost all of which was the result of demand-side imbalances. Now, there are signs that supply-side shortages are in the making, which would be exceedingly more difficult to resolve. Then there\’s the delivery aspect of food retailing. It\’s intuitive to assume that delivery services are very well positioned now, and will be into the future, but is that the case? And what are the worker conditions during this crisis that could affect deliveries?

[callout]The visual cues between the haves and the have-nots will be dramatized and possibly the catalyst for social unrest. We’ve seen it before during the Great Depression of the 1930s, and in an interconnected world though the transparency of the internet, this will quickly become another worldwide phenomenon in the 2020s.[/callout]

And what\’s the human dimension to all these considerations, including owners, workers and customers?

Demand-Side Troubles

In many parts of the country, the panic buying sparked by the realization that everyone really should self-sequester at home has ebbed a bit. And let\’s face it, there\’s only so much product you can buy and store at home for future use.

Things are moving quickly in the grocery sector with innovations the mother of necessity. Many supermarkets and mass merchants have learned to cope on the fly. The hazards of overcrowding during the checkout process have been mitigated by the addition of marks on the floor that keep shoppers separated by the requisite six feet. Also, Plexiglass barriers now separate cashiers from shoppers. Early-morning hours for elderly shoppers have been instituted at many supermarkets. Plus, food retailers urge shoppers to use credit cards to reduce money handling.

To be sure, demand-driven shortages remain in product categories such as paper goods, fluid milk, eggs, canned goods, rice and the like. Shortages vary in degree and severity by region. As a result of the initial shopping frenzy combined with the shutdown of competing food options, such as restaurants, many supermarket chains are seeing huge revenue increases. Kroger\’s March sales were up an astounding 30 percent on a month-over-month basis. Sales at discount food retailer Aldi rose more than that. Keep in mind that these sales numbers could have been much higher if it were not for out-of-stock items.

Meanwhile sales for other previously robust categories, such as apparel and accessories, have slumped to nearly zero. How quickly we\’ve become a hunting and gathering society! Will the feast now set on food retailing\’s table continue? Maybe not. There\’s downstream turbulence on the horizon with supply-side difficulties.

Supply-Side Hazards

A major result of the Great Shutdown has been to change the method of food production and distribution from farm to fork. Many farmers who planted crops with the expectation of selling to restaurants and other institutional users have discovered overnight that they have no market. Many fields have been plowed under. This is exacerbated by the fact that seasonal workers are unable to travel from country to country to harvest crops.

Dairy farmers, who have long been under stress, have been tipped over an inflection point by the removal of foodservice markets. Fluid milk is being dumped, just as it was in the Great Depression. Eggs are being dumped too. Worker and transportation issues are likely to cause scarcities in the future of out-of-season produce and of products, such as coffee, that are entirely imported.

Nonetheless, a lot of product is making its way to food producers and manufacturers. But, as we are beginning to see, there are already stirrings of worker discontent. Then, there\’s the truck driver shortage. That\’s been a long-festering problem, which will probably be compounded by the current crisis. If product doesn\’t move, it\’s of no use to anyone.

At distribution centers, retailers including Amazon and Kroger, have seen wildcat strikes and sickouts. Similar worker actions have been seen at food processors and manufacturers. So far, this activity hasn\’t been big, but seeds are being sown. Incidentally, much of Kroger\’s workforce is organized, so more concerted union action there is possible.

Maybe the biggest supply-side hazard occurs in stores themselves. Without in-store workers, product supplies available to consumers come to an abrupt dead end. So far, it seems, most stores have enough workers to function, but employees are clearly frightened by their exposure to hordes of shoppers. And the system isn\’t fully functioning everywhere; Arizona has called out the National Guard to help stock supermarket shelves.

In the main, though, many supermarket workers have been placated by the addition of hazard pay of a dollar or two to the usual hourly rate. We\’ll see how long that\’s considered sufficient, and, indeed, some retailers are conducting pre-work temperature checks. Temperature checks and mandatory mask usage for customers may be in the offing. Paid recuperation periods for workers are being instituted in an effort to keep a healthier workforce. These tweaks are probably the minimum that can be done to discourage walkouts and sickouts. And let\’s not forget that our food workforce is a frontline first responder. Of course, consumers have the voting power and are more likely to patronize a store that appears to have a healthier environment and workforce.

Online Ordering

The difficulties and hazards consumers face with in-store shopping has had one expected result: Online food shopping has experienced quite an uptick in business and is a likely paradigm change now that we\’re used to having someone else select our fresh foods.

Instacart, Amazon and regional delivery services such as Peapod and Fresh Direct are all registering big sales increases. Does that mean that when the crisis passes, food delivery will, at last, become more viable? No doubt, it will. But for the moment, food-delivery services have been simply overwhelmed by demand. In many places, there are no delivery windows left, sometimes for weeks out. In the future (and even now) the grocery business will have to rethink its workforce distribution and tech capabilities to meet customer demand.

The big delivery services in the Northeast, Peapod and Fresh Direct, have no delivery windows available for nearly three weeks out. Capacity can\’t be added fast enough to ameliorate that, especially because they\’re so highly automated. The solution is beyond hiring more workers. And an ominous red flag, Shipt workers are calling for a nationwide strike. Beyond that, Instacart has reaped a lot of negative publicity from shoppers who claim that their grocery orders erroneously show on their apps as having been delivered. Accusations of employee theft have been made. Conversely, some Instacart workers claim that customers use big tips to win quick delivery times, only to reduce or eliminate tips after delivery.

So, although we have been asked to stay at home and to maintain physical distance, the online-ordering solution may start to look like it isn\’t worth the effort and that in-store shopping is the only workable option, especially for immediate pantry needs.

The Human Dimension

One of the great imponderables concerning food retailing is the human dimension. As we\’ve already seen, the workforce that grows, produces, manufactures, distributes and sells food product is overwhelmed and frightened — and rightly so.

We\’ve already seen a wildcat strike at an Amazon depot on Staten island, N.Y., which culminated with the firing of the self-styled leader who took 50 of about 5,000 workers off the job. Amazon claimed he was fired for reasons unrelated to the walkout. Anyone who has experience with a large and authoritarian organization will give that claim all the credibility it deserves. Indeed, five U.S. Senators have asked Amazon\’s Jeff Bezos to specify if the firing was walkout-related or not.

This is probably only the beginning of various methods workers will devise to force institutions to accommodate their fears. The answer is not found in simply firing them. Perhaps moving in that direction, Amazon is developing a coronavirus test that it plans to eventually roll out to all workers.

Beyond worker considerations, there are consumer considerations. The obvious assumption is that consumers have the wherewithal to consume and will continue to find ways to do so. Yet, that may not happen. As unemployment sweeps the land – and the world – real poverty will set in. Consumers may want to shop but will have no money to do so.

Food banks that have long depended on restaurants and supermarkets to donate food to give their food-deprived are seeing those sources dry up. To the upside, though, Bezos has donated $100 million to Feeding America, which will distribute the funds to a host of local food banks.

Meanwhile, the Federal Government\’s strategy to firehose problems with blasts of money may not be sufficient, or even very useful to anyone not associated with Wall Street. How will society look when this ever ends? Will it remain civil?

Tone Deaf Exhibitions

Finally, here\’s a word of advice to the super-wealthy, the very people who have the most to lose if capitalism as we\’ve known it for a few generations can\’t be completely rescued from the jaws of pandemic. The visual cues between the haves and the have-nots will be dramatized and possibly the catalyst for social unrest. We\’ve seen it before during the Great Depression of the 1930s and in an interconnected world though the transparency of the internet, this will quickly become another worldwide phenomenon in the 2020s.

Now is the time for us to work as a community with compassion. Those who can help should do so without prompting. I say stop it with the grotesque exhibitions of wealth. Nix the pix of quarantining aboard yachts and mansions in the Hamptons and on the beaches of remote islands. This insensitive behavior makes the wealthy their own worst enemies. To put it bluntly, if we\’re not part of the solution, we are the problem.

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