What’s keeping U.S. grocery CEOs up at night?

What’s keeping U.S. grocery CEOs up at night?

The burden on the shoulders of retail CEOs has never been heavier since they first heard the words COVID-19.

Many grocery retailers have turned on a dime: ramping up e-commerce, redesigning in-store self-service bars, implementing new sanitization procedures, and investing heavily into new technologies including micro-fulfillment centers. And those were the easy ones. Retail CEOs today have weathered the onset of the pandemic and are now focused on larger issues that are influencing store operations. What is keeping the CEOs that I have spoken with up at night fall into three areas: labor shortages, climate change, and transportation; and their impact on prices and availability of the food and beverages in your stores. 

We have all seen the signs on grocery store windows (and just about everywhere else) urging people to apply for jobs. There is a significant labor shortage not only at retail but throughout all U.S. companies. We are also faced with increasing wages and benefits to attract new workers to our grocery industry. These shortages are fueling new demands, which are leading to major walkouts and strikes. Supermarket and foodservice retailers throughout the nation have announced shortening their store hours due to labor shortages. Because of the pandemic, there are a multitude of reasons we have a labor shortage: the loss of over 750,000 Americans due to the pandemic, the U.S. government’s stimulus programs that have put into question whether it’s better for an individual to work or just stay out of the workforce and make almost as much money, early retirement for those who just don’t want to work in the current environment, and the well-publicized harassment and treatment of supermarket workers from nervous and angry customers.

We all have a responsibility to promote the benefits of working for our companies. In the mid 2000s as supermarkets were creating grocerant and new food service concepts, many chefs and other staff members moved from the volatile restaurant culture to the much more stable supermarket environment that offered them more stability, better benefits, and a career pathway. Now we must employ the same vigor to attract people to work in our industry at all levels. You have witnessed first-hand the shortages on grocery store’s shelves, but the CEOs are thinking about the long-term effects of climate change on our food supply. The ravaging fires in the U.S.’s northwest decimated soy and corn crops (which in turn impacts the cost of animal proteins) and the severe weather conditions in Brazil is driving up the price of coffee – two examples that show the reality that climate change is impacting the ability to fill stores’ shelves. 

This not a temporary situation. Last week’s COP26 in Glasgow, Scotland, reinforced the need and demand for immediate action. CEOs are working with the United Nations Sustainability Program, the CEOs of CPG brands, and NGOs to step up and mitigate the climate changes to create a new food system. Food transportation is a mess. At the start of the pandemic, we had containers throughout the world locked down in ports due to COVID-19. To this day, we have containers unable to be moved and, in some cases, filled with foods that are rotting.

The cost of shipping a container full of product from China, for example, has risen from $2,000 pre-pandemic to over $25,000 today due to the shortage and back ups at the California docks because of labor and trucking shortages. Domestically we have an aging truck driver workforce; it’s estimated that by 2023 we will have a shortage of 100,000 truck drivers. You may have heard the radio ads that trucking companies are offering higher wages, covering the cost of trucking training, and offering sign-up bonuses of $15,000. We have a huge problem that is only expected to become worse. It is another example of why we need to reimagine our food system and become less reliant on long-haul transport. Today 96% of all lettuces are grown in California, which are then trucked throughout the country. Having smaller, local, indoor and outdoor lettuce farms dotted throughout the U.S. is one example of how to solve this issue.  The burden rests not only on our grocery CEOs, but on all of us to reduce food waste, reduce our carbon footprint, and hold all companies (grocery or not) responsible for mitigating climate change.

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Phil Lempert