The Griffin Report recently chatted with Alex Baloga, president and CEO of the Pennsylvania Food Merchants Association, about how grocers in the Keystone State are faring, the factors influencing them and the future outlook.
What issues are impacting grocers in Pennsylvania this year?
Economic factors, chiefly inflation, supply chain disruptions and adapting to changing consumer spending habits top the list. Rising prices for food and other goods have affected consumer purchasing power and the decisions customers make in stores and when shopping online.
Grocers in Pennsylvania have had to adapt to that on the fly, and they have done it in several ways – from leveraging artificial intelligence and minimizing waste to ever-more personalized marketing efforts and focusing on private label. But the common thread among the most successful businesses is being proactive and constantly looking for ways to differentiate and stand out.
Retail theft has also been a big challenge. It’s something the Pennsylvania food industry has taken a lead on in terms of policy and legislative action. PFMA spearheaded the push for legislation in establishing a statewide organized retail crime task force in the attorney general’s office, which came online this July, along with updated and more relevant statutory language for the crime of organized retail theft. Businesses are beginning to see the payoff there, and we are closely monitoring the situation to determine the need for possible further changes.
Are you seeing retail growth?
I would say yes based on the number of new grocery stores opening in our region this year. We’re seeing expansion from existing regional retailers but also new independent stores opening, which is great.
One of the takeaways is that grocers embrace competition and see opportunity in Pennsylvania right now.
We’re also seeing more growth on the distribution and wholesale side. That’s to support the expanding retail sector here, but also a reflection of Pennsylvania’s terrific geography and role as a conduit for goods passing up and down the East Coast and into the Midwest.
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What have retailers been doing to remain competitive?
Being proactive is key here. Retailers are going out and seeing what works best in the marketplace. One of the consequences of a recovering supply chain is it has given retailers some breathing room and an opportunity to get out on the front foot when it comes to trying new ideas and strategies.
So again, incorporating AI to improve efficiency and minimize waste, doing more on marketing – particularly trying to get as granular and useful to customers as possible – and focusing on value-based private label options are some ways retailers have been doing that.
Is there a retailer who exemplifies this approach?
A great example is the work Karns Foods has done on incorporating local products onto its shelves. More than ever, customers are interested in knowing where the things they buy come from, especially fresh meat and produce. Karns has done a wonderful job identifying that trend and meeting that need for customers.
What other factors are poised to impact the Pennsylvania grocery industry?
PFMA led the way on passing ready-to-drink beverage legislation this year. For grocers and other authorized Pennsylvania retailers, it is now possible to sell RTD spirit-based canned cocktails in their stores alongside beer and wine. We are looking forward to seeing the benefits it will have for consumers and businesses. (Editor’s note: The measure took effect Sept. 16.)
Outside of the legislative sphere, we anticipate a busy time in stores with the holidays coming up. And with inflation continuing to ease, we are hopeful that it will be a positive and successful end to 2024.
