FOX Business' Grady Trimble reports from Chicago's Happy Foods supermarket with a closer look at what you're getting less of.
Grocery-store chains are still battling supply challenges that some executives said are as bad as what they saw in spring 2020, when hoarding left holes in stocks of some staples.
Industry executives say new problems are arising weekly, driven by shortages of labor and raw materials. Groceries including frozen waffles and beverages remain scarce as some food companies anticipate disruptions lasting into 2022. A wider range of products is running short and logistical challenges are compounding for many retailers.
Donny Rouse, chief executive of Louisiana-based Rouses Markets, said he is struggling to fill shelves as his company runs low on everything from pet food to canned goods. The chain of more than 60 supermarkets is sometimes receiving as little as 40% of what it orders, prompting Mr. Rouse and his staff to try to secure products earlier and more often. Before the pandemic, Rouses received well over 90% of its orders.
"It is difficult for customers to get everything they want to get," said Mr. Rouse, grandson of the chain's founder.
Many grocery chains said that it is hard to predict how complete or on-time their deliveries will be due to limited guidance from suppliers, and executives said there is often little recourse when trucks show up with a fraction of what was ordered. Demand is higher than expected by retailers, with monthly sales up about 14% from two years ago and 3% from a year ago, according to data from research firm IRI.
To keep stores stocked, retailers are rethinking when and how to procure products they sell. Some are carrying fewer flavors or sizes, selling different brands and gathering inventory whenever possible. Regional and smaller grocers are struggling more than the biggest chains, industry executives said.
Albertsons Cos. and other big grocers said they are also feeling the impact of labor and commodity challenges but that their supply picture has improved since last year. Some, including Ahold Delhaize USA, said they have greater control of their inventory because they have their own vehicles and drivers.
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After stores ran short of toilet paper and canned soup in the early days of the pandemic, food manufacturers now are confronting new problems. Resin, aluminum and other raw materials used for packaging are running short, and many producers are giving priority to their most popular items, retailers said. Industry executives said manufacturers are unable to produce enough items to meet demand, with many employees staying home because of the coronavirus or because they have received rounds of stimulus checks. Advocates of the stimulus aid have said such federal coronavirus-relief efforts shield households from sudden income drops and help low earners.
Kraft Heinz Co.'s Lunchables have been tough to get, and Rouses now is making its own version with crackers, cheese, grapes and meat. Canned tomato goods have also been running low. When Rouses recently received 40% of its orders for Conagra Brands Inc.'s Hunt's products, the chain got more private-label products to fill the gap, said Jason Martinolich, Rouses' vice president of center store. It has also secured more products from other brands, but the grocer is offering less variety than it used to.
Kraft Heinz said there is a record demand for Lunchables, with sales growing in double digits for the first time in five years. The company said that it is proactively managing the supply chain and that it is getting more products to customers.
Conagra said its inventory of some Hunt's items will be low until it can package more tomatoes from this year's harvest, adding that demand for the products is unprecedented.
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Mr. Rouse said he and his team are asking some manufacturers to send products directly from plants. They also check shelves of Rouses' competitors and ask manufacturers why rivals have products that his stores lack. Those efforts don't always alleviate his challenges, though.
"Every grocery store is doing the same thing," Mr. Rouse said.
Many food sellers said they expect the flow of groceries to stay spotty for the near future. Walmart Inc. and other major buyers of food have reinstated penalty fees for late and incomplete orders that they paused last spring, but that hasn't improved supply challenges.
"Every day, overall, stores are ordering 10% more than what we can get for them," said David Smith, CEO of Associated Wholesale Grocers Inc., which supplies food for Rouses and other regional and independent grocers across the country.
The biggest chains are faring better, Mr. Smith said, because they make up a greater portion of manufacturers' business and are receiving more than their proportionate share. New issues are arising every season for others, such as shortages of sports beverages in the summer or string cheese ahead of the fall, grocery executives said.
Consumers are adjusting to the new norm, retailers said. Quincy, Mass.-based Stop & Shop Supermarket LLC, owned by Ahold Delhaize, is lowering prices of substitutes for items that are running low.
Keith Milligan, controller of Piggly Wiggly stores in Alabama and Georgia, recently secured chicken from a pork supplier after receiving incomplete orders. The alternative breasts, wings and thighs were much larger than what Piggly Wiggly typically sells, but most have sold.
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Amber Edwards, a mother of two who lives in Huntsville, Ala., said she has driven this summer to multiple supermarkets in her area for large packs of cherry Gatorade but has only found small sizes of other flavors.
"The shelves are empty, and online they are always out of stock," Ms. Edwards said, adding that she has been buying whatever she can find.
To read more from The Wall Street Journal, click here.
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