NGA’s “Five Questions” is a regular feature that explores the insights of independent grocery operators. This week, Rich Chapman, president of G&C Foods, shares his thoughts with us.
1. How is 2021 treating independent operators so far?
The first quarter of 2021 was strong against 2020, but we don’t believe that the second quarter will compare as favorably, due to Q2 2020’s panic buying.
In the past year, the market shifted from foodservice to retail, but as restaurants reopen, retail’s opportunity will be getting back to the business of prepared foods, convenience, takeout and continued curbside pickup options. Catering and prepared meals remain bright spots for families who got used to being at home but who are resuming their pre-COVID family activities.
There is no reliable insight to tell us how many people who discovered or rediscovered cooking in 2020 will continue to do so, but our sense is that there are a number of people who will remain cautious about public gatherings in 2021, and stores stand to benefit from this. Prepared foods and the return of food bars will make this easier for people, providing convenience and safety simultaneously.
2. Other than adapting to the post-pandemic “new normal,” what factors will be most important to our industry?
We believe that there will continue to be opportunities for independent retailers who have benefitted from consumers less willing to visit the comparatively crowded bigger chains. Many markets that we serve, such as Long Island, seem to be filled with independent supermarkets that are doing well. Many people will remain sensitive to crowded spaces for the foreseeable future. Because everything has changed – permanently – being able to order quickly and get in and get out quickly has become an important factor to consumers.
Independents who offer higher-quality selections will also do well. There has been an increase in the demand for prime, and people are willing to pay for it. Many people who choose to dine at home continue to want something that is restaurant quality.
Independents would also do well to market sustainability, care of animals, stewardship of land and other ways to differentiate their offerings. This is often easier for independents, who can feature local products with great visibility and credibility. Independents who respond to health-conscious consumers will also do well.
The independents who define who they are — and do it really well — will succeed. The independents who address shoppers’ needs to put meals together more easily, offering cooking demos and education, will be the most successful. It is important to be hyper-focused on the customer experience and differentiating yourself from the big-box stores. For example, you simply must be out on the floor and making people feel welcome. In short, you have to make a discernible difference to your clients.
Technology is another area to explore. “Scan-as-you-shop” options are increasingly popular, providing comfort to shoppers through a combination of factors, including fewer things to touch and less waiting in congested checkout lines, which can cause great anxiety for shoppers even in non-pandemic times.
Last but not least, don’t forget entertainment. There are people who like to be entertained, and who are willing to pay for that experience, which sometimes involves in-store services. Never underestimate what consumers will be willing to pay for something special!
3. What are the most significant collaboration opportunities for independent operators in the months ahead?
Three things: listening, seeking operators to emulate and taking risk. Operators need to listen to people and build relationships. They need to seek out other really great independent operators that have something to give, spend time figuring out their best practices, emulate them and put them into practice. And they need to take some risk.
Align yourself with other like-minded people who want to capitalize on the same things as you do. Collaborate on a deeper level than you’ve ever done before. Create true partnerships and tap into other areas to add value, whether with other retailers or with your suppliers. The best suppliers understand what you are going through and will collaborate on solutions to your particular needs.
4. What are the most significant challenges?
For certain, staffing issues. How much are you going to pay your own people to stock shelves? There are two distinct mindsets: those who warehouse their own products with little to no vendor support, and those who flood their stores with vendors who maintain the shelves, merchandise the product and take care of the marketing. There are advantages to both approaches. If you have vendors stocking your merchandise, you will still need to have people on the floor to answer questions. If a customer in a hurry for olives only finds the Coca-Cola and Frito Lay guys, she will surely be frustrated.
Labor is a challenge for everybody in 2021, for a multitude of reasons, from government stimulus to school and child-care uncertainties. You have to be willing to be flexible. Treat your staff well so that they treat your customers well. You can’t afford to get this wrong.
Then, there are freight costs, which continue to rise. Drivers are scarce, and LTL freight prices are higher than ever. Fuel prices this year will go through the roof, which will cause additional pressures. Do you offer Instacart of DoorDash-based delivery services? Pay close attention to the dynamics that fuel prices will have on these drivers and fees.
5. How do you envision the year ahead unfolding for independent operators?
Some operators believe that things that are outside of their control are the reasons for their success or failure. Others will look within themselves for the reasons and figure it out. So, how is that done? Figure out what kind of year you want. Dream about it – what does it look like?
There are going to be independent retailers who will flourish. Why shouldn’t it be you? Some are looking at all the above and doing what it takes to succeed.
For those if you in urban and suburban areas, don’t forget to take the population shifts of the past year into account. Location, location, location – it’s more important than ever. You need to meet your new customers where they are.
Remember that for independents, it’s the perimeter of your stores — meats, deli and bakery — that will help you compete against the corporate giants. Customers are looking to be equipped with information they need about how to prepare something, understand its sustainability and where the product comes from. Independents need to be “known” for something that sets them apart from the rest. Emulate the best practices out there and put them under your own roof!
