Outlook 2022

As we do each year, Food World and Food Trade News reached out to several retailers in our marketing area, asking them to look ahead at some of the issues facing the industry in the coming year.

Our panelists: Meg Ham, president of Food Lion; Marshall Klein, CEO of Klein’s ShopRite; Scott Karns, president and CEO of Karn’s Quality Foods; Benjy Green, chairman of B. Green/Green Valley Marketplace, Andrew Kent, EVP, Glass Gardens ShopRite; and James Lee, COO, Superfresh/Key Food.

Our questions:

1. Can you assess where things stand at your company in regard to labor shortages and supply chain disruptions? Do you see relief coming in the months ahead?

2. Speaking specifically about labor, what steps or actions is your organization taking to combat labor turnover and ensure employee retention?

3. Have self service departments (soup, salad bar, hot foods) bounced back since the 2020 shutdowns? What have you done to re-imagine those departments?

4. What gives you optimism about your business and the industry in 2022?

Meg Ham

President

Food Lion

1. The last 20 months have certainly offered a number of opportunities for retailers such as ours when it comes to both labor and supply chain disruptions. Throughout the COVID-19 pandemic, we have been proud to be a bright spot for many of our neighbors and offer opportunities to join our team when other businesses in the community were not hiring. We’ve increased our associate headcount from 63,000 associates in the early days of the pandemic to 82,000 associates today, and we continue to look for new and innovative ways to attract and retain talent at all levels of our organization. For example, last year we held three brand-wide hiring events for the first time where each of our more than 1,100 stores held open interviews on the same day at the same time. We hired more than 18,000 associates from these events, and we anticipate holding more of these hiring days in the future. As a great local brand of Ahold Delhaize USA, we are fortunate to be able to leverage the extensive ADUSA supply chain network, which is a tremendous partner. We know we’re not the only retailer working diligently to get every bit of product onto our shelves, so we’ve had to be very active in engaging with suppliers both new and old to ensure we do everything we can to stock our shelves with not just any product, but the inventory our customers want to purchase. Despite these challenges, I do believe that our global supply chain is strong and am hopeful that we’ll see a more stable new normal in the months ahead.

2. At Food Lion, we’re proud to have many associates who have been with our organization for 20, 30 and even 40+ years. They’ve been with us for that length of time because they know our heritage is deeply rooted in caring for our associates and their well-being. We also have many legacy associates whose families have been part of Food Lion for generations. We’re proud of that history and being an employer of choice in the towns and cities we serve. At the same time, we understand that every associate is unique and has different goals and expectations of their place of employment, and those goals and expectations continue to evolve. We regularly speak with our associates (and perspective associates) about what is important to them when choosing a place of employment. Additionally, we’ve been very intentional about creating a sense of belonging for all associates that values diversity of thought and collaboration, enabling all associates to reach their full potential.

3. Customers have increasingly returned to enjoy our self-service bars. We’ve introduced self-service bars in more than 300 stores over the last two years and expanded existing self-service bars in several other locations. We’ve also evolved existing self-service options or brought several new items to market over the last two years, such as soup offerings, garden salad or Asian food items in select locations. Additionally, we’ve added an expanded variety of easy home meal solutions for breakfast, lunch and dinner, with ready-to-heat and ready-to-eat options to suit our customers’ busy lifestyles. We’ll always continue to search for ways to make shopping easier for our neighbors, and our self-service bars and selection of home meal solutions are a part of that commitment.

4. I am optimistic about the future and the opportunities to meet our customers’ changing needs by providing options to shop whenever, wherever and however they choose. We are growing our omnichannel presence, expanding our footprint across our 10-state operating area and continuing to deliver an easy, fresh and affordable shopping experience that customers can count on. I am passionate about ending food insecurity. Through Food Lion Feeds, our hunger relief platform, we’ve donated more than 900 million meals since 2014 and aim to donate 1.5 billion by 2025. I am optimistic we will meet our goal and nourish families to make a real difference for our neighbors.

Marshall Klein

CEO

Klein’s ShopRite

1. Like most in the retail sector we have experienced staffing and supply chain challenges that have been exacerbated by the latest omicron surge. In the face of the most recent challenges, though, our stores are open, stocked and staffed and customers will find everything they need, thanks in large part to our dedicated associates and strong relationships with vendor partners, local growers and suppliers.

I do expect things will begin to ease. Experts say the latest COVID surge appears to be peaking now and cases are expected to start dropping. And while we have no way of knowing how long some product shortages will continue, as it varies by manufacturer and cause, the Food Industry Association has projected that the food supply chain could be significantly improved by the second half of 2022.

2. We’ve been working very hard to recruit new employees at a time when it is really challenging and there is already a reduced labor force. We’ve been hosting store-based weekly hiring events, open interview days, and corporate-wide job fairs to make it easy for people to come in and interview on the spot for jobs. We are proud that our company offers a variety of positions with good benefits, competitive pay and room to grow and develop long, successful careers with our team.

3. Self-service is back and we are once again offering our salad, soup and hot bars for customers. The response has been very encouraging so far. Our main challenges in growing these departments are the staffing and supply chain issues. As these pressures begin to ease we will continue the push to grow these areas within our stores.

4. Our associates and our customers give us hope and optimism for the future. We are thankful for our amazing ShopRite associates who help our customers and the community each day when they come to work at our stores. They’ve been a constant source of inspiration throughout the pandemic. Our customers also give us much to be hopeful for in the future. Their support over the last two years has meant so much. We’ve all been able to adapt, adjust and rise to the occasion – and that gives us much to look forward to in 2022.

Scott Karns

President/CEO

Karns Quality Foods

1. In my over 40 years full-time in the grocery industry, I have never seen a time with so many disruptions. The labor shortages seem critical from a fallout of applications from two historical pools of associates which I think are COVID-related: minors not applying due to family pressures and seniors and newly retired due to health concerns and COVID. At some point I feel these two groups will return to the labor pool. The supply chain is a beast all on its own. The good part is customers have learned to accept a limited selection. We can only hope that manufacturers will use this time for long-term SKU reductions. As far as will we see relief on the supply chain in 2022, I can’t see that happening until late in the year. It just takes too long to fill the pipeline. We were used to an on-demand order program and that won’t return until the pipeline fills.

2. In order to be competitive, our payroll for team members has greatly increased over the past year. The increase is well beyond inflation. Additionally, we have been much more flexible on scheduling needs of our team members. As a company we are reviewing all labor touch points to ensure reduced wasted labor and ensure the best usage of our workforce. And, unfortunately, some services have been terminated due to lack of staffing and needs for the customers. Going forward we are looking at additional technology reviews to make the job better. One example would be apps that improve front line communication, ordering software to reduce team member time, and scheduling technology to ensure our team members are available when our customers need them most. All of these advancements will allow us to provide vital tools to our team members while increasing customer assistance.

3. We have only opened a very limited number of self-service department – so no, for us, they have not bounced back. Currently we only offer hot foods on a service basis or pre-packaged, and in a very limited selection. Salad bars are not open and we won’t have any set opening dates until COVID numbers are much lower. Self-service hot soups have returned but with additional procedures. The only way I can see many of these returning is when we see COVID rates become drastically reduced. There are just too many variables that can’t be controlled. We are also working on reimaging these areas include an expansion of pre-packed ready-to-enjoy salads and a focus on hot foods in family ready-to-enjoy dinners.

4. We are very optimistic about the future. Independent grocers have the ability to grow, change and meet customers’ needs very quickly. We have proven this over the past two years by looking outside the box when filling our customer’s needs. Going forward, the customers’ needs will continue to change and so will the industry but we have the following to lean into: customers have learned to cook more and are enjoying it; customers have seen value in at-home family meals; inflation isn’t transitory and food-at-home is one of the best ways to keep a family on-budget; staff has seen this as an industry worth being part of – we are growing and changing for the better. In closing, I would like to thank my staff and the industry for the fantastic job they have done over the past two years. Every person involved has gone above and beyond in operating in a safe manner while keeping customers’ needs met.

Benjy Green

Chairman

B. Green/Green Valley Marketplace

1. Staffing throughout 2021 continued to be our greatest challenge across many phases of the business. This was largely manifested across our part-time roles, especially in our more entry-level positions. Escalating wages, driven by big box competition, as well as national warehousing operations, made it increasingly challenging to recruit talent amongst those entering the job market for the first time, historically a strength for the supermarket industry. From a supply chain perspective, this was also evident amongst key suppliers and our own distribution operations, as it relates to drivers, order selectors, etc. While this has most certainly added pressure to our supply chain operations, it has also provided us with the opportunity to rethink our distribution strategies, and find creative ways to streamline operations, and enhance product sourcing; leveraging the strengths and nimbleness that being an independent grocer provides. While we certainly expect that many of these challenges will linger into the first half of 2022, we are very confident that as conditions continue to evolve and stabilize, we are well positioned to leverage our strengths as an independent grocer, to put ourselves in the best position to drive outstanding results.

2. Our core strength has been, and will remain, our tenured associates, who have played such a key role in navigating the challenges of COVID, while continuing to foster the “family environment” that has sustained us for over 100 years. We rely heavily on those folks who are “all in” as it relates to our success, to mentor our newer associates, and help them to understand and feel the things that set us apart, beyond an hourly wage. In addition to a strong company culture, we have demonstrated that we are also “all in” as it relates to giving our teams a career path, that goes beyond monetary           compensation alone. While we have leveraged traditional tools such as signing and referral bonuses, merit increases, etc., more than that, we have outlined true career paths that include leadership and skills/trade training to better position our teams to handle the challenges that we face, while continuing to grow with our company and better provide for their families.

3. We have continued to see customer purchasing habits evolve throughout 2021, even as some self-service areas were reinstated. While some customers returned to self-service hot food, we continue to see a constant increase in pre-packaged meals (both ready-to-eat and heat-and-eat). Due to the increase in purchases of pre-pack salads, the decision was made to not reinstate salad bars, but instead increase the pre-packaged offerings, with an aggressive take on increased variety, many made in-store and alternate offerings. New recipes and salad builds are evaluated weekly to ensure availability of favorites along with the hunt for the newest creation. We are also looking at partnerships to offer additional “good for you” options including organic and vegan. Reception from customers has been enthusiastic with little to no comments about services that have not returned. Customers are very excited with the expanded pre-packaged offerings which is reflected in the item sales.

4. What gives us the most optimism going into 2022 is our employees and the incredible job they have done navigating the never-ending challenges of COVID and the myriad of obstacles that resulted from the pandemic. To see the commitment and ability by our team to adapt at every level of the organization has been nothing short of incredible. Our associates’ performance over the last two years gives us confidence we can overcome any challenges 2022 throws at us. Due to the pandemic, customers have transitioned dollars spent in restaurants and take-out to the supermarket channel. We have been fortunate to be a beneficiary of those sales and see an opportunity for continued growth. We will be expanding our variety and introducing new items and categories to our meal solution offerings. The convenience of our fresh assortment of grab-and-go options including our heat-and-eat, cook-and-eat, family-style bundles and recipe component meals are all part of our chef-inspired “Meals Made Easy” program. Couple that with our in-store butchers and full-service seafood departments and continuously expanding product offerings in local, plant-based, vegan and we think we have the points of difference the customer will be looking for in 2022.

Andrew Kent

EVP

Glass Gardens ShopRite

1. In terms of the supply chain, staffing issues at suppliers have resulted in supply constraints, but it is really hard to predict what is coming down the line. I imagine we’ll continue to see constraints until the summer of 2022. As an independent, we work especially hard and rely on our strong relationships with vendor partners, local growers and suppliers to ensure that we have the products our customers need on the shelf.
2. As a retailer our associates are essential workers — they don’t have the option for remote work, so paying competitive wages is key. In addition to paying competitive wages, rewarding and recognizing our associates for their contributions is more important now than ever. We’ve even leveraged our social media platforms for recognition opportunities and to celebrate milestones that are professionally and personally meaningful to our associates. In terms of retention, I believe strong leaders play a vital role.  In addition to communicating our vision, mission and purpose, we are committed to developing the leadership skills of our management team. There is nothing more important to increasing morale and building a strong culture than the quality of your leaders.  As a neighborhood grocery, we play an important role in the community; you can’t remind your associates of that fact too often.

3. Self-service has returned with strong demand — highlighting that our customers have a preference for choosing for themselves. We did have some important learnings from the COVID experience in that there continues to be demand for single serve packaged meals and bakery items. So, while we’ve reopened our self-serve bakery and prepared foods, we continue to see interest for packaged items as well, and we’ll continue to provide our customers with that choice. One of the biggest changes we’ve seen is in our deli department. Our customers have embraced placing their orders electronically – online or through a kiosk – rather than waiting in line at the counter for service. We continue to offer personal service because it is important to many of our customers.

4. I am exceptionally optimistic about our company as we undergo generational succession planning. We have an amazing team who have dedicated their careers to serve our customers and communities. As the next generation takes the torch, I know they are ready to take the lead. We’ve invested in a corporate trainer to ensure our managers and leaders have the skills they need. As we emerge from the pandemic, I know that we are more productive and prepared for whatever curve balls may come our way.

James Lee

COO

SuperFresh/Key Food

1. I don’t think we will see any improvements in labor shortages and supply chain disruptions in the coming months ahead. Employees are getting sick and also having a hard time finding emergency child care. Schools and classrooms keep getting shut down by COVID cases and kids are at home in virtual school and without childcare, our employees are not able to come back to work. I would like to be optimistic about the current supply chain issues. But I know it will not be getting better any time soon. It is becoming very difficult to foresee which products are going to be affected next, we try to pre-order as much as we can before a shortage but by the time we realize we needed to buy in, it is too late. To make matters worse, our cost of goods has gone up drastically in the past year. I hope things will “normalize” for our sake and the customer’s.

2. During the peak of the pandemic, we gave an hourly raise to all our existing employees to show our appreciation for their work, which in turn also minimized turnover. We also provided lunch boxes and ordered meals for employees during our busy days to make sure that they were staying healthy!
3. We currently do not have a self-service department in our store. All food is served behind the counter.
4. Weathering a storm with other people builds a better foundational relationship and we’ve been able to do that these past 2 years with both our vendors and employees by being transparent with everyone and really showing that we care about everyone’s welfare! We have grown so much as a business in this pandemic, learning as quickly as we can on how to provide a safe and pleasant shopping experience while also maintaining a fully stocked supermarket. I think this pandemic has changed the way people shop and live their life and we are very optimistic that cooking at home has become more of an important part of people’s lives and that it will continue to boost the supermarket business in the years to come.