Exclusive interview: The impact of COVID-19 on the grocery community
Snack Food & Wholesale Bakery was recently able to talk to Ryan Richard, vice president, retail grocery, GS1 US, Ewing, NJ, about the impact of the coronavirus on the grocery community.
Liz Parker: What are the current challenges with diverting food from the public sector into retail, and are food suppliers "retail-ready"?
Ryan Richard: The food supply chain is facing unprecedented demand via retail channels. With restaurants, colleges, office buildings and other commercial spaces closed, there is virtually no food being consumed outside the home during social distancing.
We’re seeing farmers who are forced to destroy crops in an effort to reduce food waste because the food harvested will spoil before it has the chance to reach consumers. Diverting the food typically produced for a foodservice setting into a retail channel is difficult because in some instances it requires building a new supply chain system where none exists. Foodservice products move through the commercial supply chain differently than they do for retail sale. Some suppliers are not “retail ready” as they have never sold into retail. They are simply not set up with barcodes or other GS1 Standards like advance ship notices (ASNs) that retailers require. Additionally, there are fewer IT resources to set up new items into the existing systems, so it’s even challenging for those that already have the infrastructure.
The use of global data standards is part of the evolving discussion happening now between key foodservice and retail grocery stakeholders. Not only are GS1 US initiatives focused on collaboration now more than ever before, there are other cross-industry groups forming to help the industry quickly pivot during this crisis. The Food Industry Association (FMI) and the International Food Distributors Association (IFDA) have partnered to help lift some of the restrictions on redistributing food between the two industries. They are developing a matching program that connects foodservice distributors that have excess capacity (products, transportation services, warehousing services) to assist food retailers and wholesalers that require additional resources to fulfill needs at grocery stores. Since many of our members are also members of these two organizations, GS1 US is supporting this effort based on our years of experience driving standards adoption to increase efficiency and collaboration.
LP: What sort of e-commerce models do stores offer, and how can trading partners work together to speed up these plans?
RR: While e-commerce in grocery was on the rise prior to the pandemic, no one was prepared for the mass pressure being placed on these systems today. As the weeks go on, consumers are heavily relying on click-and-collect and grocery delivery, but many are dissatisfied when they are told there are no more delivery times in their area or when they experience too many item substitutions.
This is a pressure-cooker situation that is exposing some breakdowns in trading partner collaboration, supply chain visibility and data quality. In each of these situations, the trading partners that operate with the common language of standards, as opposed to proprietary and paper-based records that can slow down inventory management, are able to locate products and keep virtual and physical shelves stocked more easily.
As retailers work as fast as they can to fortify their e-commerce offerings, foot traffic in-store is skyrocketing. By learning from current challenges, retailers can be better equipped to relieve the pressure on the store and ramp up e-commerce. We are hearing from our members that robotics and warehouse drones are being explored for more frictionless shopping as social distancing continues. There is a huge opportunity for emerging technology to help make the processes behind the scenes far more efficient and speedy. I believe we’ll see an accelerated exploration of emerging technology that supports item fulfillment in the months to come.
LP: What sort of trends have you noticed with foodservice and retail grocery supply chain during the COVID-19 pandemic?
RR: Overall, both supply chains are focused on becoming more efficient in the short term, and more resilient and flexible in the long term. Adhering to GS1 Standards and the core best practices that enable efficiency and flexibility are so important right now. Abandoning these processes in times of crisis can only lead to confusion and poor customer service in a post COVID-19 world.
In retail grocery, there is far less customization in product categories than what consumers have been used to. Anyone who has been grocery shopping lately has noticed there is little variety in certain categories. Are the days of finding 17 different kinds of yogurt in your grocer’s cooler gone for good?
Retailers are challenged by a lack of inventory and a lack of visibility into the inventory they have, so the priority focus is on keeping shelves stocked, not on customer differentiation. The supply chain processes between suppliers and retailers, such as the use of ASNs to know what is being shipped and when, are critical. These ensure that systems, transactions and trading partners remain electronically up-to-date and aligned.
On the foodservice side, there is a concern for how to deal with a phased recovery period. There will likely not be an immediate return to pre-crisis restaurant dining. It’s important for foodservice operators to work more closely with suppliers to stay in tune with how much inventory is needed to match a slow progression of demand over the next few months. Also, in a post-COVID-19 world, it will be important to keep products moving with as much transparency as possible. Consumers can often become fearful and skeptical in times of crisis. We anticipate GS1 Standards will continue to play a major role in how suppliers, distributors and operators work with each other to understand the origins and journey of a product to satisfy the new needs of post COVID-19 consumers.