Welcome to Leading Edge, a semi-monthly Q&A forum where some of the grocery industry’s top executives share their views on several current and important topics. This week’s interviewee is John Ruane, Chief Merchandising Officer and SVP-Omnichannel Merchandising for The Giant Company, the subsidiary supermarket chain of Ahold Delhaize that operates stores in Pennsylvania, Maryland, Virginia, and West Virginia under the Giant and Martin’s, and Giant Heirloom Market banners. John gave us some of his views on retailing in the present COVID climate, including the current supply chain situation and some of the challenges of adapting to a post-COVID environment from a merchandising perspective.
- On a scale of 1-10, with 10 being pre-COVID service levels, how would you rate the current supply chain situation? Where do you think most of the problems lie?
With respect to the Center Store categories, I’d rate the current supply chain situation at a 5, with some categories like pet food and frozen foods continuing to show more headwinds in recovery. Most of the problems lie with suppliers getting the right raw ingredients or packaging to produce the product. From a DSD perspective, labor shortages and increased demand for beverages and snacks as the customer purchasing habits changed have contributed to shortages and service issues. Imports, driven by global supply chain issues, are challenged as well.
Regarding Fresh categories, we’re seeing about an 8 in produce and floral due to strong supplier partnerships that keep us in stock. Deli is a 7 with opportunities in service deli and prepared foods, which face challenges when it comes to raw materials and staffing issues. Bakery is also a 7 due to the impact of vendor labor shortages and scaling back varieties to protect key items. Finally, meat and seafood is a 7 primarily due to labor shortages.
- As part of the supply chain challenge, inflation seems to be the most obvious component as it impacts customers. What’s your crystal ball view on when we can expect to see prices stabilize and the entire supply chain function return to more normal levels?
I would say there are two forces at work with inflation: the ongoing supply chain challenges and commodity increases. We have seen some abnormal spikes in commodities recently; they have not been passed through yet. If the situation continues, we will see a compounding effect on inflation that we were already feeling for the past several months, which was largely driven by supply chain and COVID pandemic issues.
We started to see the inflationary pressures as early as June 2021. The current environment indicates that the inflation will compound over the prior year due to packaging, raw materials, labor, and transportation pressures.
- It has now been two years since we’ve all had to adapt to living in a COVID environment. What have been the biggest internal merchandising challenges you’ve had to deal with and what changes have you and your team implemented to meet those challenges?
From a merchandising standpoint, our biggest challenge has been the constant change as it relates to planning and then re-planning. It is difficult to get a read of what our performance will be because there are so many variables. Ongoing challenges will continue to impact how we can service the customer, especially on the new habits that customers have adopted during the various stages of the pandemic.
Our merchandising team remains nimble and continues to think outside the box when it comes to meeting the needs of our customers. Communication and collaboration internally (including cross-functionally with departments like pricing, operations, and marketing) and with our supplier partners have been critical, and I’m proud of the way we’ve all risen to the occasion throughout the pandemic. Whether it’s offering more meal solutions, adjusting (increasing) packaging sizes, or approaching planning with an eye on the short-term, the team has continued to analyze, develop, and implement plans that not only position us to meet the needs of our customers but also deliver on our omnichannel strategy.
- Can you update us on ADUSA’s transition to self-distribution as it applies to The Giant Company?
Our self-distribution strategy will play a very important role in our ability to meet the needs of the omnichannel customer. Over the past two years, customers have formed new habits, with many engaging with us not only in our stores but through Giant Direct too, be it through pick up at store or delivery. We have made significant progress and just finished converting the Bethlehem, PA facility to SDP that services grocery products to several of our stores.
- With post-COVID customer shopping habits likely forever changed and e-commerce a more significant factor, how do you view The Giant Company’s position in the retail landscape looking out over the next three years? How do you see the overall competitive arena changing in the markets in which you operate?
I believe that we are in a position of strength as we have already been competing in the e-commerce space for years. This enabled us to be well-positioned for the nearly overnight increase in online grocery shopping in March 2020. We continued to fortify our network and never shut down online grocery services – and that’s something we’re incredibly proud to be able to say. In August 2021, we began accepting SNAP/EBT online and in November, we opened a first-of-its-kind e-commerce fulfillment center in Philadelphia, greatly expanding our service capabilities for the market and for the first time, offered Giant Direct to select markets in New Jersey, with more on the way. We launched partnerships with Instacart and Ship2Me. And just last month, we eliminated minimum orders and pickup fees, helping us deliver even more value to our customers and differentiating our offering from others in the space.
I think there will be an evolution of technology in an effort to make online grocery shopping even more customer-friendly. At The Giant Company, we’ll continue to engage with our supplier partners and leaders in this space as we invest in our e-commerce business. We’ll look for opportunities to increase the speed of delivery and pick up, expand our online offerings, grow our B2B segment, and enhance the overall experience for our online customers.