Consultants prepare for the holiday season as supply-chain challenges

Consultants prepare for the holiday season as supply-chain challenges

Thanksgiving is still two months away for consumer markets. Jeff Culhane was shopping for turkeys at the grocery chain Tops Markets LLC last winter.

Toppers and other U.S. supermarket operators started purchasing turkeys, spices and cranberry sauce early this year, aiming to prevent shortages that left some shelves empty in 2020. Grocery chains are struggling with supply-chain challenges ahead of what is usually their largest time of the year, and some executives said they are preparing consumers to host larger gatherings than they did late last year — although it is becoming less clear how people will spend holidays as the delta variant drives COVID 19 cases higher.

We locked down turkeys the second week of February, said Mr. Culhane, senior vice president of merchandising for Tops.

Supermarket executives said they had secured many holiday staples after ordering more products such as stuffing and gravy from a wider range of brands than usual, and many are trying to get items quicker so they can be stationed in their warehouses. They say they are buying goods earlier to ensure they get as much product as possible from suppliers ahead of the holidays.

However, grocery retailers warned that consumers may not find every brand, flavor or size of food they want for Thanksgiving and Christmas meals. Consumers may also see higher holiday shopping bills as retailers pass lower cost increases in transportation, labor and commodities, they said.

According to retailers, all four supply-chain challenges remain due to shortages of labor and raw materials. A range of products, including bottled beverages and snacks, is running short as logistics challenges compound for the food industry. Companies are short of truck drivers and plant workers while goods continue to be held up moving through ports. Supermarkets are sometimes receiving as little as 40% of what they order compared with pre-pandemic days when they were well over 90%, executives said.

New York-based Tops said it started preparing for this year's holiday season as soon as last year is wrapped up, placing advance orders for items that had proved difficult to keep in stock. The company purchased holiday staples such as gravy, red and green sprinkles for treats, along with cranberry sauce and nuts and cinnamon spices. Since earlier this summer, it has been housing frozen turkey and other items in its warehouses.

Some retailers say their canned pumpkin products have been delayed and are planning to sell more store-brand versions if needed.

Grocery delivery provider Scott Crawford orders turkey about a month before it usually does, said Fresh Direct LLC, adding that the company ordered 2% to 3% more to make sure it will have enough. Koninklijke Ahold Delhaize NV, owned by Fresh Direct, is also having other holiday items arrive earlier including sugar, flour and other ingredients to prepared food it sells.

It s a bad reason for you to lose a customer because you don t have cranberries, Mr. Crawford said.

SpartanNash Co. is spending more on wages and transportation to lock in labor necessary to keep its inventory of goods flowing, said Dave Petko, its chief Supply-chain officer. The Midwest food distributor, who is planning for this year's holiday season 53 weeks out, is assessing how much inventory it will need based on COVID 19 case levels.

Some said they would rather spend money than risk empty shelves.

We wanted to make sure we didn t get left out, said Steve Smith, chief executive of Food City stores in the southern U.S. Food City started selling Halloween candy in August compared with the typical starting point in October, he said.

Food sellers adjust demand forecast and forecast based on sales volumes. Some said they worry that they may have underestimated consumer demand: Grocery sales were stronger this year than many retailers expected, even as pandemic restrictions on restaurant dining disappeared.

Some items, such as canned tomato products, have already been running low in recent weeks, executives said. They added that they still don t know how full or on-time their deliveries from manufacturers will be and that there isn t much to do when they receive only a portion of what they ordered.

We are taking more because we know there will be shortages, partly because of demand, said Gus Lebiak, president of distributor Krasdale Foods Inc.

Consumers themselves could shop for holiday gatherings earlier, some executives said, to avoid the last-minute stress of finding staples. In stores, industry officials said, shoppers won't find empty shelves, but may find less variety of items.

It may not be the labels they've used for the last 20 years, Tops Mr Culhane said.