Grocery stores and food retailers are stockpiling products to prepare for another widespread outbreak of COVID-19 cases amidst the already busy holiday season rush.
Edward McLaughlin is a professor of food industry management, interim Dean of the Charles H. Dyson School of Applied Economics and Management and an expert in the efficiency of food distribution systems. He says food companies, anticipating another potential wave of COVID-19, are putting previous demand buying models aside and are now sending staple goods to grocery stores, even without an order.
“The winning formula for supermarkets is simple: carry a wide range of groceries with good pricing. However, because even large supermarkets cannot carry everything, most companies opted for the maximum number of products with a minimum of space for each. The challenge was, and is, to have adequate supply on the shelf to avoid out-of-stocks while not loading up on costly inventory. Thus, every retailer makes use of demand forecasting, triggering an order to the supplier at the last minute, just before the store stock is depleted, so-called ‘just-in-time’ inventory.
“Companies were caught off guard by COVID-19 when consumers engaged in panic buying and inventories were too low to accommodate the demand spikes. Suddenly, surplus was not a wasteful expense, it was a brilliant survival strategy.
“Retailers have learned key lessons from the pandemic: shoppers will be loyal even if you don’t have the fancy extras (skinned, boned, lime-marinated chicken thighs) as long as you have the basics (chicken breasts). Anticipating a potential third wave of COVID-19, companies are now putting demand models aside and simply sending paper products, pasta, beans and holiday items to the stores with no need for an order.”
- 30 -