Grocery store CEO: How we’re dealing with food shortages and higher prices

Editor’s Note: Nicholas Bertram is president of The Giant Company, a grocer known to customers as Giant, Martin’s, Giant Heirloom Market, Giant Direct and Martin’s Direct, with locations across Pennsylvania, Maryland, Virginia and West Virginia. The opinions expressed in this commentary are his own.

Since the onset of the pandemic, there has been intense scrutiny on the grocery industry, as historic demand and a stretched supply chain have led to rising food prices and shortages of certain products. In fact, food prices are at their highest levels in a decade — not ideal news less than two weeks out from one of the most food-centric holidays of the year.

For The Giant Company, our cost inflation has accelerated during the past five months and is around 4% — more than triple the 2020 rate of 1.2%. Hopefully the inflation rate has peaked, but there does not appear to be any real deflation on the horizon. Most of the factors driving price increases are beyond our control — like ongoing labor shortages, limited availability of raw ingredients, freight and packaging constraints, and unpredictable weather events. The more it costs to make an item and get it to its final destination, the higher the price goes.

Consumers are increasingly becoming worried. According to The Food Industry Association’s latest U.S. Grocery Shopper Trends Tracker, more than half of consumers surveyed (53%) are concerned about rising prices. Our own research, conducted regularly via research groups and virtual panels, echoes their findings. Customers are monitoring prices, substituting what they put in their carts and even going without.

There is good news, though. The grocery industry, including our team, is adapting to consumer needs in real-time, and will continue to do so despite these market conditions.

At Giant, we are trying to absorb as much of these higher costs as we can to avoid passing them on to customers and protect them from more frustration. We’re sending product from warehouses to stores earlier than it is needed, and also sending it in larger quantities to reduce the number of truck trips, which saves us on labor and transportation costs. For an industry that has historically operated on razor-thin profit margins, the current situation only exacerbates these pressures.

We’re also aggressively investing in promotions to remain competitive and offer additional ways for consumers to save money. For example, this year we rolled out the Flashfood app to all of our Giant and Martin’s stores, which allows shoppers to purchase fresh food, including produce, meat, deli and bakery products, nearing its best-before date at significantly reduced prices. Many of our customers have told us they can eat more fresh food because of the program.

Like us, grocers around the country are also aiding customers by suggesting how to plan meals and maximize their budgets, and by recommending different meals, recipes and ingredients that they might be able to substitute.

We’re equally as invested in minimizing the impact of supply chain disruptions and shortages. We remain in close contact with our suppliers and are working to bring in alternate products, from both new and local suppliers. Buying local means we can mitigate shipping costs and keep retail prices down. Throughout the pandemic, we tapped on our long-standing relationships with Pennsylvania dairy farmers for milk and growers for potatoes and apples, which we never ran out of or raised prices on. In addition, our produce team brought on more than 20 new suppliers and grew strong, personal relationships with each, which also helped us meet the incredible demand experienced last year.

A contractor works on a crude oil pipeline infrastructure at the U.S. Department of Energy's Bryan Mound Strategic Petroleum Reserve in Freeport, Texas, on June 9, 2016.

Related article Higher gas prices and heating costs will hurt low-income families the most this winter

As quickly as we are getting deliveries to our stores and e-commerce fulfillment facilities, our hard-working team members are getting the products onto the shelves. We’re encouraging our customers to be flexible and to purchase only what they need. It is possible customers may find a particular brand or variety is unavailable at a point in time, and in these instances our team members are ready to offer our customers comparable alternatives.

As someone whose career started in retail at the age of 16, I can assure you the challenges we’re facing are personal for us, too. Our company isn’t taking this laying down; we’re determined to make it to the other side. I have never believed more in the grocery industry and in our nation’s food manufacturers and growers. I’m inspired by the leadership that continues to be demonstrated by our industry to serve families and communities.

If we’ve learned anything over the past nearly two years, it’s how resilient each of us can be. It’s this spirit that makes me so proud and thankful to be a part of our industry. With Thanksgiving right around the corner, we want this to be the best one yet for customers, team members and their families. Now more than ever, we all need to spend that valuable time together, connecting over a meal and making memories.