FMI: Supermarkets facing a demand issue, not a supply issue

There is no disruption in the grocery supply chain, according to FMI-The Food Industry Association, and what retailers, manufacturers and consumers have been experiencing during the growing coronavirus pandemic has been the result of unprecedented demand for product. Arlington, Va.-based FMI works with and on behalf of the entire industry to advance a safer, healthier and more efficient consumer food supply chain.

In a briefing on Monday with Supermarket News, Doug Baker, vice president of industry relations at FMI, outlined the challenge that the industry is facing and the steps that retailers and manufacturers are taking to address those.

“We're still seeing the same issues that we were last week,” Baker (left) said. “This is a demand issue. This is not a supply issue. And we've been messaging and asking anybody that gets in a position where they can message locally or nationally to ask customers to only purchase no more than seven to 14 days’ worth of food and supplies. As we're probably all starting to see now, most of those spikes are influenced by information and the daily news feed. So if it's a containment, if it's a quarantine, if it's a shelter-in-place order, then you'll see a spike in sales each time something like that happens. And it doesn't necessarily even have to happen in your own backyard. You just have to hear about it and you're going, ‘Oh, I better go get some stuff because it could be happening here.’”

Related:Grocery industry is there for consumers amid coronavirus crisis, say FMI and NGA

Baker emphasized that there's no disruption in the supply chain, unlike in a natural disaster. Temporary product shortages can and likely will happen, Baker noted, but supply pacing helps ensure these out-of-stocks are short-lived and that the supply chain can respond.  

“If you think about a natural disaster, meaning there's a flood or there's a power outage or there's debris across a major highway, that's an actual disruption of a supply chain,” he said. “Because we don't have those right now, the supply is still flowing. We're just about two to three days behind because the demand has been so unprecedented.”

So what is the industry doing to meet that demand?

For one thing, last week FMI announced a partnership with the International Foodservice Distributors Association to funnel excess industry resources to the grocery sector as the foodservice industry is responding to requests to close or at least reduce in-store dining. That has given an opportunity for the foodservice industry and the grocery industry to do mutual aid, with trucks, drivers, capacity at their facilities and product. “So far to date we've got a hundred offers from the foodservice side of the industry saying here's some of these resources we can make available,” said Baker. “And now we're connecting those to retail wholesale on our side, so that it's so far been really good.”

Related:FMI, IFDA partner to steer foodservice resources to grocery

Demand in supermarkets is still pretty widespread across all categories at this point, Baker acknowledged. Household cleaning, personal care, shelf-stable and frozen are some of the categories being hit hardest. “Some of the things that manufacturers are doing to try and keep up with that demand is that they are shipping direct to the store on some high-cube items such as paper towels, toilet paper, water,” he said.

FMI is also working with states to give weight waivers in order to be able to move some of those heavier loads as well as with the government to get waivers in order to ensure that driver's access is still available, including getting some flexibility on some of the hour requirements so that drivers can continue to work.

Manufacturers when possible are also looking to reduce packaging to make it easier to stock those high-cube items. “If they don't have to put the paper towels directly in a box and they can just put them on a pallet, wrap them up,” Baker said. “Many of our associates are not even getting the product on the shelf. They're getting the pallet on the floor and then they're basically cutting the shrink wrap and stepping away and consumers are just taking it.”

Manufacturers are also putting out inventory allocations or inventory pacing. “That's purely in order to make sure that they get the broadest distribution of inventory across the country, which I think is really smart,” Baker told SN. “Retailers are doing the same thing, they're placing limits on products in the stores. We’ve encouraged them to do that. What it does is it gives access to the broadest number of customers in the store. We just need to make sure everybody gets as much access to the things that they're looking for as they can.”

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