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Industry Insights

ICSC Virtual Series: Supply-chain mayhem gives advantage to regional and local grocers

May 8, 2020

Independent supermarkets are outshining larger corporate rivals as COVID-19 disrupts consumer shopping patterns and supply chains, experts said on the latest ICSC Connect Virtual Series, Grocer Response to COVID-19.

“This will be a renaissance for independents,” said Burt Flickinger, managing director for Strategic Resource Group. Grocery giant Albertsons posted a 47 percent year-over-year surge in same-store sales for March and a 21 percent increase for April. But smaller regional chains like Buffalo, N.Y.-based Dash’s Market and Wooster, Ohio-based Buehler’s Fresh Foods, generally saw increases between 90 and 100 percent, Flickinger said.

COVID-19 has exacerbated weaknesses in the supply chains on which big supermarkets like Albertsons and Kroger depend, Flickinger said. “Costco’s suppliers let them down,” he said. Small, independent operators are able to source products from local suppliers and keep their shelves stocked with the foods customers want, while the larger, packaged-goods supply chains are getting choked by unusual demand, he said. “You might not have Nathan’s Famous hot dogs, but [local operators] will have a selection from a local meat company.”

Meanwhile, bigger companies and online competitors like Amazon have seen drastic delays in availability of popular items, said Ethan Chernofsky, vice president of marketing for Placer.ai. “The Trader Joe’s and the Whole Foods have borne the negative brunt of this trend, while local grocers are becoming stronger.”

COVID-19 safety issues could lead to more shopping at independent brands versus big national brands, said Scott Mushkin, founder and CEO of research firm R5 Capital, which examines consumer trends for major brands. “This idea of minimally processed, local goods is going to get more ingrained in the consumer rather than less,” he said.

Smaller chains have an advantage over big rivals when it comes to delivery, as well, the experts agreed. “Amazon is stumbling on delivery,” Flickinger said. Local grocers, though, can use their own team members to deliver, Chernofsky added. “It’s very effective.”

The full ICSC Connect Virtual Series episode is available here (Chrome works best).

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By Brannon Boswell

Executive Editor/SCT