Food & Beverage Industry Outlook
- Mar 31, 2023
Rich Colloca, Partner and Leader of the firm’s Food and Beverage Group, is joined by Jim Dorey, President of Inserra Supermarkets in a Solution Session industry outlook. The two discuss recent trends including competitive pricing, transportation and logistics, consumer behavior and the outlook of the supermarket industry, as well as offer actionable solutions for food and beverage businesses.
Rich Colloca:Welcome to EisnerAmper's Food and Beverage Industry Outlook. I'm Rich Colloca. Today I'm your host to discuss a variety of topics impacting the food and beverage industry. Today we're being joined by Jim Dorey, President of Inserra Supermarkets. Jim, welcome.
Jim Dorey:Rich, thanks for having me. I'm excited to be here.
RC:Tell us a little bit about at Inserra Supermarkets.
JD:Sure. Inserra is a family owned business with a history of about 80 years. We operate about 24 supermarkets in New Jersey, and parts of New York, some liquor stores, and great family business, started as butcher's. We love food and we've been doing it for a long time, taking care of our customers.
RC:What's the average size of you supermarkets?
JD:Roughly 60 to 70,000 square feet. We're a pretty large company, even though it's a family business, over a billion dollars in sales, US.
RC:Let's start right at the top of the charts with the question on everyone's mind these days, inflation. Organizations are concerned about the impact of inflation to their business. Consumers, rightfully so, are concerned about their level of affordability in this environment. What are your views on inflation and how is it impacting the consumer?
JD:Yeah, it's been tough. These last couple years, it lasted a lot longer than anyone anticipated. It was actually prior to the pandemic we started to see struggles in the transportation part of the business, the costs that were just going through the roof, and they were affecting everyday output. Fast forward, as we got into, obviously, Covid and the pandemic, then there were supply chain issues, talent issues, all of these components that were going into it, and it's been compounded. So you're coming off of really two consecutive years of double digit growth, and now in 2023, we're all looking and saying, "Okay, where's this going to take us?"
Myself? I like to talk to our partners, the manufacturers, the commodity buyers, what do they see? And unfortunately, the outlook for the first half of this year at least, it's going to stay, it may steady and the climb will not continue, but the softening, it looks like it's a ways off. There's been a lot of different components that have come into play since then as well, not helping the consumer.
RC:It was interesting. I ran across some recent data that suggested that although we're in this inflationary environment, the average order size at the supermarkets has not increased to the direct proportional levels of inflation. What do you attribute those factors to?
JD:Yeah, we're seeing something similar. So you know, look at a customer, a family, maybe they have $150 a week to feed their family, so they're going to stretch that as far as they can and make choices. As this has gone on, and certain key items that they count on really have just continued to climb, they had to put less items in the basket, unfortunately. So the cost of each item is costing more, therefore they're putting less in for that same $150. And it's tough. People are trying to make choices. As a retailer, we're trying to help families to give them alternatives so they can stretch it further. What are the proteins that they can get? What's the produce and vegetables that we can bring to them, so they have these options for value, because no matter where you sit in the chain, it's really affecting people for sure.
RC:Now, do you think this is going to be somewhat of a more permanent shift where customers are used to different consumption patterns now? I know in college you're not eating the same and then you get used to eating that type of lifestyle?
JD:Yeah, no, without a doubt. People learn habits quickly, and when you go to putting 12 or 13 items in your basket versus 15, when the prices come down, maybe you learn to live with a few less items in the house and you adapt to it. So it's something that we certainly watch. Our ultimate job is if we can deliver value to the customer, we're going to help them to take care of their family and become their choice that helps our business. So the rising prices are not good for anyone.
RC:What are your thoughts of the future direction of inflation?
JD:Yeah, again, we look around. Yeah, as much as we're in the northeast, obviously is where we operating, even though we're a regional player, we look globally. Some of the impacts that happen around the world to commodities, wars, whatever it might be, really do have an impact. So it started with containers coming overseas. They had that piece. Then it was trucking across country, and then weather impacts. So again, when we look to the manufacturers, and I like to get as many opinions as I can, and then we kind of form our own thoughts around it, I think this first half of the year, maybe we start to see it settling and then maybe it comes off a bit. A lot of the price points from the manufacturers are sticky, so when they get to a point, they may not raise them anymore, but it takes a lot longer for them to come down. So I think this number, where we are is where we'll be, and hopefully towards the end of the year we'll see it ease up a bit.
RC:And where do you see the future of inflation?
JD:That's a good question. I mean, everything's cyclical, but I could tell you from some of the commodity cycles that we watch, they're not behaving the way they have in the past. So eggs is an example. You could really take a year-over-year trend on eggs, and you can watch the rise in the fall of the cost, and it's pretty close, 5, 6, 8 years in a row. This past year has just been crazy, you can't lay it up against anything else. So while it's hard to predict, yeah, I think it's got to come down. People are going to adapt, the demand will drop off a bit, and then that makes costs come down. So I think the outlook on it is that behaviors will change and enforce it to come down somewhat.
RC:You alluded to issues related to the supply chain. Prior to the pandemic, I think most people did not give a whole lot of thought in terms of the intricacies of how the supply chain operates. Today, the supply chain is a front and center topic. What are some of the issues that led to the disruption of the supply chain pre pandemic, then became further exasperated during the pandemic right through today?
JD:To your point, Rich, none of us really talked about supply chain. Now it's part of our everyday conversation. Wait times alone, you want equipment, you want product. I mean, it could be months even a year out, which we were used to things happening in a week. But prior to the pandemic, so we were hearing a lot about shipping. So a lot of product coming overseas, and they would say, "Hey, the container costs went from 3000 to 8,000 to 9,000 to 12,000." So then you started to see this trickle down cost coming to us, which eventually affects the retails. Then it was within the country, whether it was trucks, availability of drivers, train cars, whatever it might be, everything that you had as a comparison, the cost to transport it started to cost you even more than the product itself. And all of that went weighed into it.
There's also the labor issues. As we got into Covid, a lot of these plants, they couldn't fill the plant with capacity to work, so then they started cutting back on certain items. So if you produced 25 items, what we saw is a lot of came in and said, "Hey, we're going to make numbers one through seven, the rest of them were just going to put on hold for a while." So people started to slowly notice, my favorite flavor wasn't there. And early on they ask about it, they think it's temporary. Then as it becomes more permanent... I'll tell you the most recent one, which is crazy, Ronzoni pastina, which for a lot of Italian families, you'll laugh, babies grew up on that. It's a little pasta cut specialty thing. It went on hold, people were kicking and screaming a little bit. Now it's been discontinued altogether. So it's the understanding of the customer to say, "Wait, things that I always got, I just am never going to be able to get again?" So it's ongoing and it's lasted so much longer than we would've anticipated.
RC:What about the impact of the illness to some of the animals, like chickens?
JD:Yeah, yeah. So weather and certainly the avian flu, that impacted meat commodities, but also for eggs. And eggs was one of those charts that I was talking about earlier where you could typically say any given year, it's probably the cost to the retailer may go from 90 cents per dozen up to maybe $2 at most. We're up over $5 cost right now. It's climbed month after month, and it's based off of a market, but it's supply and demand. So the manufacturers will tell you, "Hey, this killed 40% of the flock. There's less available and that's what it is." But eggs has always been one of the cheapest proteins, when you feeding a family on a tight budget, it was really helpful. Now when you're talking about a dozen eggs, four and five and $6, it's really, really impactful.
And then weather, some crazy weather patterns, that's always I impacted produce. If it's a bad season, we're growing watermelons, you're not going to get great and the costs are going to go up. So we've just seen more unpredictable weather occurrences that are affecting multiple layers, including the transportation.
RC:We're going to continue to see further disruption and given what we've experienced, you think we're going to see some level of remodeling of the supply chain?
JD:Yeah, I think people always adapt and the manufacturers get out there, the retailers get out there and you start to say, "Hey, we can't keep doing what we always did because this is the result." And as there is more unpredictability, what variables can you take out of it? An example, you and I were talking about the other day, when you look at produce, one of the biggest parts of produce that drives the cost is the transportation and weather impact. So if you have a bad season, it gets too hot, the strawberries are no good, too much rain, the strawberries are no good. So when you start to get, we're growing them now indoors, they're growing in your hot house or whatever it might be, it's more sustainable. It uses less water. It takes weather at an equation and you can grow it closer to where the customer base is, so the transportation comes out of it. So while that hasn't scaled up enough to supply everything, I think you'll start to see more of that.
We talked about chicken, Do Good was a newer brand. They collect the food waste from the supermarket. So you think about how much food that's still good to eat, that was going into dumps, they take it, they convert it into feed for chickens, and then they sell that same chicken back to the supermarkets. So you start to close that loop and again, you get smarter about it. So I think yeah, you're going to see a lot of it. Micro fulfillment centers getting the product closer so it's less of a footprint. So I think all of that's going to happen and some of the need and some of the catastrophe that's happened is going to force it to happen more quickly.
RC:Has your company done anything on a more local level in terms of fulfillment centers?
JD:Yeah, so we were one of the first, Inserra Family was one of the first in the country to build a micro fulfillment center, Clifton, New Jersey. So it's really a robotics center run by our team that helps us to fulfill hundreds of orders a week that are typically for shop-at-home customers. So they'll make an order, the system collects, puts it together, we get it to a store, and then it's either picked up and delivered. So you're always trying to get more and more efficient. Yeah, we're always looking at that and who are the local suppliers that we can deal with that are coming closer to us. And really sustainability becomes a part of the conversation in everything that you're looking at, whether it's supplies for our stores, product that we're going to resell or the stores and the building of the stores themselves.
RC:He touched a little bit on technology, Plato said, "Necessity is the mother of in invention." What are some of the technological innovations that are occurring at the store level that your company's experienced?
JD:Yeah, listen, it's everywhere, from artificial intelligence to our ordering system. Years ago we would get a big book, see the items that we needed. We'd be talking to the manufacturer on the phones, send them the orders. Now we have artificial intelligence that will tell us, here's the buying pattern, here's the weather, here's the holiday, here's what the weekend looks like. And it'll help us to be more in stock that way. Consumer facing in the aisles. We have a system called Tally. It goes up and down the aisles. It's a robot basically that scans the aisles to see where items belong, where they should be, out of stocks, do we have the right price points on them to make a better experience for the customer? I mean, self-checkout way doesn't seem like technology, 10 years ago was really not that existent. Now half of our transactions go through self-checkout.
So you got a lot of people out there working on a better, smarter way to do it. And then there's the fulfillment side of it in terms of shop-from-home. So for us, we offered a customer obviously can shop our store, they can walk in the door, pick up an order that they placed online or we can get it delivered to them with several different partners. So technology, they're always about getting the most efficient, the quickest routing, how to replace items for them when they don't get it. You're really just trying to meet the need of the customer, make it as efficient and as convenient for them. So you become their retailer of choice.
RC:I imagine shopping from home came in handy that you certainly during the pandemic.
JD:Yeah, it's funny. So we've been watching Shop-from-home for a long time, Wakefern, ShopRite, Inserra has been in it probably sooner than a lot of others, but we always look to Europe. They're typically 5, 6, 7 years ahead of us in the trend. So prior to the pandemic, it was looking as if Europe was maybe 20% of their business was online for retail, and we were sitting at about eight or nine. During the pandemic, it skyrocketed. The good thing was it showed that we could handle the business. Customers adapted really quickly. Some of that has come back. Afterwards, people were a little bit afraid of it. And yeah, I'd be remiss if I didn't mention our store associates that made it happen during the pandemic. They were in the stores every day taking care of customers, and one of them brought up the point to me. They said, "You know what? For some people we were the only person outside their family that they ever saw during the whole pandemic."
They came to the store, masked up, gloved up. Our associates were out there getting it done for them and putting themselves at risk a little bit obviously, but it was an experience that we certainly appreciate and remember. But customers adapted through that. So online is always going to continue to grow, the availability, the way that it gets delivered, the lead times. But that being said, the brick and mortar experience is still 80, 90% of what goes on. So that'll always be an important role too.
RC:It's pretty interesting walking around a store and see a robot whisking around the aisles, I imagine. What's the feedback from your customers?
JD:It's funny. They look, and customers are great because they always said, "Hey, are you taking somebody's job?" And we say, "No, hey, this is what it is. This is how we do it. We still staff our stores the same way. It just helps us to be better at it." Sometimes it's safety and they're also scanning the store for slips and falls and anything that could be a hazard, which is phenomenal. Previewed a new cart the other day that as you're shopping, you're dropping the items in, it's scanning them, weighing them, you can walk out the door with it. But even that, that's not the newest technology, but they continue to improve it. So now they've put cameras on the side so it can also scan your shelves. So it's serving the customer and serving the retailer.
So customers are great, they're curious, they want to know, they want to make sure that it's safe. And some people will adapt. You probably know some people that hate self-checkout and they're never going to do it and that's fine. We have somebody to take care of them, but it's kind of a need and you just keep transforming. I think when you walk into a bank or a convenience store or a fast food place at this point, kiosk is probably one of your only choices.
RC:Business is always measured overhead. Technology's been a significant component of overhead, certainly. Where do you see technology heading and is your company going to continue to make significant investments to further expand technology?
JD:Yeah, we love to learn. I mean, the business of being a grocer, it's very much the same as it was a hundred years ago, but it changes every year. So we like to look at all the technology. A lot of times, like we recently installed electronic shelf tags, which now we can change all the price points at once. There's no more going through and hanging thousands of tags. Now, it's very, very costly. We watched the technology for probably five or six years until we jumped in. And even this technology, it's imperfect, but it's much better than what it was. And typically when we're adding this technology, we're not replacing any jobs. We can't staff enough. And it's hard to fill roles. And I think really, any sector of the business, in the US at least that I talk to, they're having the same struggles, finding people that want to do the job.
So we like to supplement what we do to make the experience better. But yeah, no doubt, every week literally there's a new technology coming across my desk. Our job is to realize what's real, what's practical, when is it time to get in? So like the carts for an example, we saw a demo, this is version 4.0, now it looks like it's really ready for us to give it a try. And a customer's your typical, pick them up and they go. Some people want nothing to do with them, but the ones who appreciate technology and convenience, I think they're going to love them.
RC:With the recent proposed merger between Kroger and Albertsons, what is the current landscape of the competitive environment?
JD:Yeah, listen, we're in the northeast, the New York, New Jersey market, probably one of the most competitive in the country and it's attractive because there's so many people and the dollars are out there. So I think that one is one we always watch, mergers come and go and acquisitions come and go. Some of them work out fantastic and some of them don't. Our job is our four walls, taking care of our business, making sure we're doing the right thing for the customer. But I think competition always makes you better. It's a great choice for the customer, so it's going to make you step up your game to keep your business and grow it. When we look at big companies getting bigger, we actually like that we're a family owned business, 80 years of doing this in the neighborhoods that we do business in. So when somebody gets bigger and the decision makers get further and further removed from our market, that's usually good opportunity for us.
And with competition, we also kind of joke, it's kind of like you're in the woods with your friend and a bear comes running. I don't have to outrun the bear, I just have to outrun my friend. And with competition, when a new one comes in, if they start to take business, the ones at the bottom of the competitive set are going to feel it and may go away and you're going to have more opportunity as well. So it keeps everybody sharp. It's something we certainly watch. You get some competitors that come in with very, very deep pockets that can do some things that get pretty silly and that makes it challenging.
RC:Do you think we're going to see more of the larger size merge or are we going to see smaller size mergers to create some economies of scale?
JD:That's a great question. It's cyclical, right? I mean, it's what's popular. Let's get really big. We'll take the economies of scale. We'll buy the best and we'll kill them. Then it's, hey, let's really zoom in and be regional and let's be the local player. Even some of the huge companies, you see their trucks rolling by. "We're local." I'm saying, "Well, you're really not", right? You're based hundreds of miles away. So I think it goes through these kind of, swings back and forth of what's popular, what Wall Street want wants. We're lucky as a family owned business, we don't answer to other investors. So we do what's right for our customers and our associates, and that's a great way to do business. You're not answering quarter to quarter some of the biggest players are.
RC:Do you think we'll continue to see market penetration from international players? And you touched on this a little bit earlier, but is our shopping model influencing the international model or is the international model influencing our shopping model?
JD:It's interesting. I think it's a little bit of both. So international, this is always one of the ones that this market always shows up on their targets because they look at the available dollars. That's how we all look at it. They say, wow, we should be able to come in there, clean house, and there's a lot of dollars on a table. And time after time they come in and they see how difficult it is to compete, how demanding the customer is, how good the competitors are. And some of them have come and gone and there's been quite a few of those that just in my 25 years of doing this. So I think they'll continue to come in.
We always learn, right? No matter who it is, we respect the way they come to business. And some of them give us new options that are better. Some of the limited assortment ones make you understand, "Hey, do I need a hundred ketchhups or should my hundred be more like 60?" But they want to force one on you. So you got to learn from everybody. And we take from everyone. And I know, as market leaders, as ShopRite is, and Inserra supermarkets, people come in, they want to see how we're doing it because the results over 80 years speak for themselves.
RC:All right. When I was growing up, grocery shopping was routine but pretty fun experience. You typically went to the store once a week, there were a limited number of stores you went to, a limited number of product offerings. Today the choices seem endless. We've seen a pretty vast shift over the last 25 years or so. What are some of your thoughts in terms of consumer behavior and how did the customers view the changes that have evolved in the industry?
JD:Yeah, I'll tell you what. So looking at age groups and segments, I mean, some younger teenage kids probably never have walked into a supermarket. They walk in, they go, "Oh, this is cool. You have so much." And even my own kids, I grew up in the business and they kind of come through sometimes. They're used to hitting something on the phone and food shows up. It's a different experience. You have an older customer that grew up with a traditional supermarket and they want it that way. They don't want the store to be too big. You have people as they go through stages in their life, maybe they're living in a city, then they get married, they have kids, all of a sudden it's like now the trip to the supermarket matters. So it has certainly evolved.
The example I always use is if it was 20 years ago and you needed a gallon of milk, you were really going to a supermarket. Now it's really at your fingertips, you have so many different ways to get it, on demand, at your door, whatever you want. So it evolves. And one thing I do say though, if you walk through a supermarket and you look through some of the glitz and glamour, it's not a lot different than it was 50 years ago. You got a dairy department, you got your butchers, you have your bakers, and you have all of these different components that make it up. But some of the commodities and some of the expectations in between, those have changed a bit.
RC:And how about the variety of product offerings?
JD:Yeah, I'll tell you. So when you get into certain ethnic, certain areas, certain neighborhoods, even just take milk for example, milk was milk, right now it's oat milk, almond milk, soy milk, coconut milk, all these different derivatives of it. And you have to be on trend. You have to understand it for your customer, everyone's got different dietary restrictions. And then serve the purpose and still have enough room in your store. You can't have every item that exists because you just won't sell them all. So you're constantly going through the categories and the items that are relevant and talking to your customer to understand what they need. But it's pretty wild how it changes and
RC:I imagine you have to stay abreast of nutritional trends.
JD:Yeah, it's funny, our company, Inserra Family, made a commitment to have dieticians in a majority of our stores. So we have registered dieticians in probably 50% of our stores and they really serve all of the stores, and we know how important it is because there's so many kids, unfortunately, that are born with different dietary issues. So to be a resource for them and to help them has gone a long way with us and with the seniors and people that go through diabetes and all these different challenges, you're the supermarket, but you've become part of a community that you want to take care of them. And helping people to eat healthier goes a long way, obviously. It's the right thing to do and it's great business
RC:Given all the options that are out there in terms of being able to purchase product ranging from traditional brick and mortar stores, supercenters, large stores, small stores, specialty store, right through e-commerce, where do you see the future of shopping headed?
JD:It kind of evolves. So it comes in trends, superstores, everybody, build them as big as you can, make them giant warehouses. Then you start to realize, you know what, they're very expensive. A lot of people don't want to walk seven miles to get their grocery shopping done. So then you start to bring them in. Then there's different formats. Hey, everyone got away from, a lot of people got away from service in the stores. We still have butchers in our stores, which is a big point of differentiation. People start to understand why they're cutting it right here. This is really fresh. How did that other stuff get here? It's been in a package for how long?
We have bakers in our stores. They're making cakes behind the counter, decorating them for birthdays and they're a resource. So that part of it, I think is really, really important. Bigger companies, a lot of times I'll say they want to cut, cut and cut. So what pieces can we take away from this but still give the experience? And at the end of the day, you get this plain vanilla box that does the minimums and it's hard to be a point of differentiation. So I think that experience, you still get a chance to do it and do it well. It makes all the difference in the world.
RC:What do your consumers say to you? What do they prefer?
JD:Yeah, listen, they're great because they'll tell you, especially in New York and New Jersey area, when you're in the stores and your store teams are listening and they're close to the customers, we get maybe a hundred different emails and phone calls and letters each week from our few hundred thousand customers weekly. And usually it's recommendations, something that you just got really wrong and made them mad or something that they're asking that you do. So they give you clues to what's on trend.
But a lot of times we're out in front of it too and we're introducing something new, a new commodity, a new type of cake. Cupcakes get really hot and then all of a sudden they drop off. So it's just kind of fun to see the changes. I mean you could stand there front of the bread aisle and just really see the hundreds of different offerings and there's a customer for every one of them, and it's kind of being dialed in to know that get in the right mix, not having everything but having the relevant stuff. So if you keep listening to them and you watch the demographic change around your store because you in our markets, it does change pretty quickly, then you get a real key as to what you should have.
RC:In this highly competitive environment, in terms of managing the consumer expectations, what type of data do you look at and how often do you evaluate feedback?
JD:Data in the last probably 10 years has become bigger and bigger and bigger. And I think data for us sits up higher at the wholesale end of things, where they're looking at trends, the manufacturers are presenting, here's the flavors that are coming in and the sizes that are going to matter, here's our innovation that we want you to get out in front of. At the store level, we're seeing the customer, we're down on the floor getting it done, and we're understanding what they want and we're looking at what's not moving. If it's gathering dusk, guess what? It doesn't belong there. And you got to really turn product quickly for so many reasons, to be as fresh as you can. So I think that the customer will always tell you what they're looking for, and then we just got to stay in front of it and really keep your tabs on all of the industry, all your competitors.
If I walk into a Walmart and they have a huge display of some item I'm not familiar with, I'm going to assume that they made a good decision and we need to at least bring this in and try it out. So yeah, some of it's not real scientific, but it's the experience. And we literally have associates in our stores that have been working for the family for 50 years. So in any given store, we may have a thousand years worth of experience from that neighborhood in that business. So there's not much data that can replace that.
RC:What are your thoughts as it relates to cost as compared to convenience for the consumer?
JD:Yeah. Well, you got to give both, right? I mean, it's kind of like the old hotel rooms when you're driving down a highway. It was like, air conditioning and color TV. That's expected now. So cost and convenience, you got to go over and above if you're going to win. A clean store, good pricing, having most of what they want is not enough. You got to really cater to them and try and meet every part of their need because customers are going to shop in different places. Nobody eats in the same restaurant every single night, or most people, there's probably a few. So we know that they're going to shop around. So we want them to go, when they experience something else, we want to know when they come back to us, we're doing it better than anybody. And we take a lot of pride in doing that. So you got to have the right cost and you got to make it convenient.
And it's challenging. I mean, it's hard to get the stores fully staffed all the time in certain areas. So you got to serve the customer's need and guess what? Everybody likes to shop at the same times. The weekends are super, super busy. So a lot of customers come in at the same time. How do you get them in and get them out as best you can to respect their time?
RC:How does it impact your geographic location decisions?
JD:Listen, we're fortunate that the areas that we're in are very, very populated and you got some great neighborhoods around them. And take a place like Jersey City, New Jersey. So we're in a shopping center that had a couple box stores and then a developer got in 15 years ago, maybe even longer, and started to buy it up and parcel it. So in this particular center, it's taken our store, they're going to knock it down, they're going to build eight 60-story towers, and our store will go into one of those 60-story towers. So we'll be on the second floor, we'll be fortunate to have parking, but you'll have literally 4,000 units that'll go up within a stone's throw of our store, and we'll have a state-of-the-art store to serve the customers that live in that building and all the surrounding towers. So yeah, we're in really, really good locations.
And I think even against the big players like the Amazons and the Walmart of the world, we're in places that are very difficult to build a store at this point. So we have a warehouse, which is our store. We have product and we got a lot of people around us. So we're constantly looking at what's the best way to serve those people. Some of them may not even know that we ship to their house if they wanted it. So we're always talking about what's a better way to do that.
RC:So if I run out of food at halftime at a Super Bowl, I just press the button, go down the second floor.
JD:We got you. Yeah, we'll bring it up to you. You don't have to miss the Justin Timberlake Show.
RC:We've seen the impact of the pandemic as well as the frequency of storms and other events. When these events happen, customers want to still be able to get to the store, stock up on food and supplies. In this environment, how important is contingency planning and what are some of the strategies that you've implemented?
JD:Yeah, I'll tell you what, it's been more occurrences than ever before. Who could have imagined? I mean, how do you plan for the pandemic, something that never happened to any of us before? It starts for us with a unbelievably dedicated team. I mean, we had associates that went above and beyond every time, whether it's a hurricane, some of them would be hole up in a store for two, three days away from their family, keeping an eye on the building and keeping people safe. So we constantly talk about what you can do, the weather occurrences more so than ever. We're in some city environments where flooding is not that unusual. Power losses, whether intentional shutdowns or unintentional. How can you be ready for that? So you kind of build into the building where you can to plan for it and you adapt. I mean, really, you can't plan for any unexpected, but you got to have people in place that know, and we get those calls.
Unfortunately, a fire in the middle of the night, flooding here, power went down. And it is amazing to me that our people just go like it's nothing. And they just make it happen. I mean, this past holiday season, Christmas season is obviously crazy for us. One of our stores, the power went out twice in the same week. They had record sales volume and they had to replace the frozen section of the store twice in one week on top of that. When I talked to the store team, they said, "Yeah, we got it done." And they just kind of roll with it. So we plan, we try and make great plans, but the reality is that the people, the foot soldiers you have are going to get it done.
RC:And you have a very narrow window of time to turn around crisis manage.
JD:Yeah, no doubt. You got to be ready. And it never happens when it's convenient. It usually happens at the worst times and it's happening in a lot of places. So we work, being a part of Wakefern, a bigger cooperative, we use some of their resources as well. But I want to say in 80 years, not that you've seen it all, but you've seen a lot.
RC:Well, in closing, looking ahead into the future, what are your thoughts projecting ahead over the next couple of years?
JD:The future's bright. Listen for us, for our company alone, I'll speak to first, we have three stores under construction and we invested a lot in our stores. We're in great markets. We got a great team behind us. I think on the terms of bigger, whether the economy goes up or down, whether it's inflation or not, through all the different cycles, supermarkets are really havens. We saw it through the pandemic as well, so we're ready for it. I think we're going to learn to adapt more quickly, but we feel really good about the prospectus for us.
This market, I think as well, the New York, New Jersey area, real strong, good competitors, but the population is pretty solid, so a lot of good things will happen. Where do commodities go around the world? I think we're going to get smarter to our point earlier about supply chain learning and how do you bring things closer starts so it's traveling less? How do you take variables like weather out of the equation more? And I think that's going to keep happening and we're going to get better for that.
RC:Well, Jim, it's been a pleasure. First and foremost, thank you and all the grocers for your dedication during the pandemic. And like we talked about, when these natural events occur, always there and it's easy to get to the stores, they're up and running very quickly. So thank you. And thank you for your insight today.
JD:Ah, thanks for having me as a guest. And I hope the information's useful. It's been a pleasure speaking with you, Rich.
RC:Well thank you to our audience today for attending. Please visit eisneramper.com to stay up on our latest developments and trends in the food and beverage industry.
Transcribed by Rev.com
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Richard R. Colloca
Richard Colloca, is an Audit Partner and National Food and Beverage Practice Leader, member of the firm’s Manufacturing and Distribution Group as well as a member of the firm’s Profession Practice Group providing audit, accounting, tax and business consulting services to clients.
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