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If you’ve visited a chain grocery store recently and had trouble finding items on your shopping list, you are certainly not the only one.
While there was the infamous toilet paper and hand sanitizer shortage near the start of the pandemic, the supply chain disruptions we’re currently facing are a bit more extensive. Experts believe that the supply chain disruptions are caused by mitigation strategies implemented during the height of the pandemic designed to reduce the production of goods and services that have residual effects on current production.
However, in addition to production issues, there is also a human resource issue. According to the Labor Department’s report from this past Tuesday, almost 4.3 million workers voluntarily quit their jobs in August. While the report highlighted that there was a net employment gain of 5.9 million jobs over the course of the past 12 months, the warehouse industry is a space that has seen less favorable growth. In July, the Labor Department reported that the warehouse industry had a record 490,000 job openings.
The combination of decreased production and fewer employees (warehouse workers + drivers) has contributed to sparce shelves at local grocery stores. Unfortunately, Moody’s Analytics has warned that these supply chain issues may be here to stay for some time and in turn, cause inflation rates to remain high. However, for some small, local food service brands and farmers, inventory issues affecting larger organizations may be an economic upside as Capital Region community members turn to them to order food directly.
At the start of the pandemic, local farm stands began to adapt and adopt e-commerce solutions to serve consumers more efficiently. A necessary strategy considering the fact that in 2020, 40.3% of respondents in a study conducted by Forbes visited physical locations significantly less frequently because of COVID-19. While this was a major blow to many businesses who did not initially have a digital presence, organizations across the nation took measures to meet their consumers’ needs. This trend has remained ever-evolving within the food supplier vertical throughout the past year and a half.
A couple of weeks ago, we talked briefly about how the manner in which food suppliers conduct business has changed considerably. In 2020, U.S. online grocery sales grew by 40% – largely sparked by the pandemic. However, for many food suppliers, there was hope that a return to normal facilitated by the introduction of vaccines would cause a shift back to in-person shopping. However, according to a new report from the Food Industry Association, consumer concern over the pandemic continues to impact shopping behavior.
This data combined with the aforementioned supply chain issues supports two predictions. The first being that as we approach the holiday season, local food producers and suppliers will be highly sought-after entities. The second projection is that consumers will still expect e-commerce solutions to be readily available and functional.
Last year, consumers spent $791.70B online with U.S. merchants. This figure was an increase of 32.4% year-over-year, according to U.S. Department of Commerce figures. Furthermore, eMarketer recently released a report that projected that e-commerce sales will account for 18.9% of total holiday sales this year – totaling $206.88 billion. While local food consumption is music to many organizations’ ears, ensuring that an online shopping platform has been set up before the holiday season is in full swing is critical for long-term success.
Organizations often find that there are a range of channels customers utilize, a range of devices they browse for products or information on, a certain period of time they look for a good or service and so much more. If your business needs assistance determining the best way in which to attract local shoppers, contact us today! We’ll be happy to assist in providing marketing guidance to grow your book of business.
While supply chain issues will affect positive change for some local organizations, we would be remiss not to mention the fact that not all local family farms thrived over the course of the past year and a half. Staffing shortages, inflation and a decrease in total revenue due to store closures were some of the factors that negatively impacted the industry. While the pandemic was certainly a catalyst for some issues, the farming industry has been experiencing drops in net income for a period of time. According to the USDA Economic Research Service, farmers experienced a 50% drop in net farm income between 2013 and 2018 as the prices for corn, wheat, dairy, beef and other farm products crashed.
So, when you’re putting together a shopping list, we suggest pausing to determine what can be sourced locally. Shopping local can be cost effective, can provide you with diverse products, will frequently give you a better overall shopping experience and will financially support the local businesses who make our communities so unique and special.