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The New Normal How COVID-19 impacted Western Canadian grocers and what the future might look like now

By Carly Peters

There’s no playbook when it comes to a pandemic and when COVID-19 hit, grocers had to pivot in every direction. From finding solutions to supply chain disruption, setting up e-commerce solutions, to protecting employees and customers, this essential service had to rise to the occasion to ensure the survival and wellness of the communities they serve. As the industry is being asked to adapt once again as COVID-19 continues to move on, some of the lessons learned will stay in place in order to create a new normal.

No one will ever forget the images of people clearing out shelves, carts full of toilet paper as the WHO declared a world-wide state of emergency. Grocers were forced to operate at “business as usual” levels, when things were far from it.

“How quickly grocery stores understood their essential role and worked tirelessly to assure the public there would be no food shortages was nothing short of incredible,” states Diane J. Brisebois, president and CEO of the Retail Council of Canada (RCC). “In one shopping trip people were buying products at a one to two month purchasing level. And empty shelves only signified there just wasn’t enough hours in the day for grocers to put out the product.”

Brisebois stated retailers had to not only adjust their relationship with distribution centres and vendors, but also had to quickly source out alternative avenues when they projected product shortages.

Altering logics was also essential to keeping products on shelves. The RRC lobbed many provincial governments, such as Ontario, to lift the limit on hours for store deliveries for a more efficient movement of goods from warehouses to stores.

The organization also worked to get packaging and labelling restrictions lifted so vendors could readjust their production lines – which often produced products for retail and foodservice at a 50/50 rate.

Even with all these adjustments, pulling from an already disrupted supply chain was no easy feat, especially in a country were food diversity has increased over the years. The Canadian food system had many pre-COVID issues, explains Dr. Simon Somogyi, the Arrell Chair in the Business of Food, and Director of the Longo’s Food Retail Laborator at the University of Guelph.

“70 per cent of the food we eat is made in Canada, particularly in the case of packaged shelf stable goods. But we import about 65 per cent of the vegetables and fruit we eat as its too cold to grow produce outside from November through May and have to get it mainly from places like USA or Mexico. The fact that the Canadian border to the USA remained open was critical to our food security now and pre-COVID. Because of COVID-19, the Canadian dollar dropped dramatically against the USD in late March and that had big impact on imported food prices.”

He adds along with an increase in price on some imported produce, meat took a hit thanks to temporary plant closures, either due to workers contracting the illness or processors who had to modify the layouts of their plants. Spacing out workers, getting PPE also slowed down processing and the supply of Canadian meat to grocery shelves.

The Canadian Federation of Independent Grocers’ (CFIG) concerns about beef and poultry supply issue led to government issuing a ministerial exemption for provincially inspected meat. “This was a direct result of independent retail grocers in Alberta raising the issue of beef supply with us,” says CFIG. “The resulting exemption helped alleviate the supply issue by allowing provincially inspected meat to cross provincial borders, which is normally not permitted.”

CFIG also set about establishing and renewing lines of communication between associations representing producers, such as eggs, dairy, poultry, and beef. That line of communication for example, pushed back a planned increase in egg prices by a couple of months.

“There are some parts of the country, particularly in rural and remote areas that had some challenges in terms of supply. Those issues need to be discussed as we hopefully begin to come out of the pandemic,” CFIG states.

However, due to the CFIG’s advocacy efforts, there is now a new focus in government agriculture departments to dealing with supply disparities.  “Independent grocers are in a number of communities in this country where there are no chains or other grocers.  So if those independents are not being fairly supplied, then that means Canadians in those communities are not being treated fairly and it becomes an issue of food security.”

While major disruptions reveal process weaknesses, they also reveal true heroes, says Anna Petrova, vice-president, supply chain for Kraft Heinz Canada.

“Collaboration between retailers and manufacturers has been truly remarkable, and we would like to keep this momentum going to continue managing our food supply chain with the One Team approach. Our collaborative teams have shown great leadership and alignment during the pandemic, which drove amazing results,” she says, adding with all hands on deck, and despite the unprecedented disruption, the company’s Canadian and global operations teams have been able to support consistent growth amongst all categories, with some of them facing tremendous growth over the past three months.

She states on their end, manufactures had to run overtime, implementing temporary pay incentives to hourly employees, and worked with some retailers to place orders in full pallets to reduce case picking and to speed up shipping from distribution centres. On the retailers’ side, they increased their replenishment orders, worked around the clock to accommodate sometimes doubled throughput at their distribution centres, and created extra transportation capacity. 

“Our connectivity and collaboration with our customers was a key enabler to smooth out the impact on supply chain through March and April, and to restock retail shelves,” says Petrova.

As consumer behaviour will likely be changing post-COVID, demand sensing and understanding consumer trends is critical to a strong supply chain, she states, adding global supply chains are still not as stable as they need to be. “We are still very busy resolving and mitigating various supply challenges associated with imported finished goods, raw, and packaging material. A very important lesson is to ensure that while we always remain lean and service-focused, we also need to create capability to ensure stability and consistency of operation in case of a major disruption.”

Virtual reality

Many a harried family might have been familiar with the “click and collect” option of grocery shopping before COVID-19, but most Canadians hadn’t been using grocery e-commerce. According to a March report by Dalhousie University, as a result of the COVID-19 outbreak, nine per cent of Canadians started shopping for food online for the first time. It may not seem like many, but keep in mind only 1.5 per cent of all food sales were conducted online before the crisis.

Whether grocery retailers had an e-commerce program in place or were starting from scratch, no one was prepared for the onslaught of orders and added expenses and labour of curbside pick up. SYNQ, an innovative security technology based in B.C., worked with every level of retailer, from chain to independent, to find solutions that kept people safe and stores sane. They helped retailers deliver an improved customer experience, which in a time when the rest of their world was upside down was a huge comfort to customers to have some things seem ‘better’ than worse in uncertain times.

The company’s text your order option was a great jumping off point for customers who didn’t feel comfortable using an online shopping platform and for stores who didn’t have the capacity to take orders over the phone. Shoppers simply texted “Order” to the store, were provided a link to begin their shopping, and used an intuitive keyword search to find the product SKUS to complete their list. Staff on the receiving end would pick the products from the order using their own mobile device. Customers could monitor the process in real time, until their order was complete and ready for curbside pick up.

This was also a contentious area for many stores, which often had allotted parking spots with a phone number posted to a sign for customers to call when they were there. Some people would pull up and leave in mere minutes, while others had to wait on the line until someone would pick up the phone.

SYNQ’s complementary software solution to text your order was curbside pick up via text. Customers would roll up and text the number on the sign to let employees know what stall they are in. This information is directly sent to store employee’s mobile devices and all the transactions, including wait times, could be monitored through the Pick Up Control app on the system’s dashboard. SYNQ partnered with Microsoft during the pandemic and development of the software – integrating the entire solution within Microsoft TEAMS.

According to Brisebois at the Retail Council of Canada, there’s no question that e-commerce will continue to be utilized by all ages of customers even as the pandemic winds down. “E-commerce grocery is not going away. It won’t be at the frenzied pace we saw during COVID-19, and it’s not going to drop off but rather stabilize.”

In-store e-commerce might also be the new normal, suggests Nolan Wheeler, CEO and founder of SYNQ, pointing to bulk foods and self-service areas, which may never return to the new landscape. This vision would see customers utilizing tablets in these areas to place an order – say for 100 grams of walnuts – enter their name for pick up, and have the product ready and waiting for them at an assigned checkout when they are done shopping. Wheeler adds this also provides a great opportunity for retailers to cross-promote or bundle items – offer French’s mustard when a deli meat is ordered, for example. 

Even with these lessons learned, and new protocols in place, no one can truly predict what the future holds. However, it appears that pivoting is Western Canada’s strong suit and the industry can once again rise to the challenge of a new normal.

Stories from the Frontlines

From independents to chains, Western Canadian retailers talk about their time during COVID.

Community Service

As a multigenerational-run grocer, De Luca’s Specialty Food Store understands the connection between food and family. And if there was one positive thing to come out of this pandemic, it was the strengthening of this bond.

“People have come to appreciate quality ingredients, meal preparation, and cooking with family more than they have before,” says Carla De Luca, adding they, like many other retailers, saw a dramatic spike in demand for baking products such as flour and yeast. “We assumed people were spending more time in the kitchen, exploring new recipes, and baking much more than normal. Things like chocolate chips, dried fruits, jams, and sugars starting to be on everyone’s shopping list.”

The Winnipeg independent grocer, which specializes in imported Mediterranean foods, meats, and cheeses did struggle with the supply chain of products that would typically come from Europe, but was able to still service customers with their in-house made sausages, pastas, sauces, and bakery items, along with supplementing with some local alternatives.

“This ‘disaster’ situation certainly makes you think on your feet, and react quickly. We had to take the time to listen to customers needs, and define a new way to serve customers for the short and medium terms,” she says, which included adding online shopping, curbside pickup, and delivery services. “The crisis has changed what an average grocery basket looks like, and it forces us to react and accommodate in order to keep up with customer demands. Our customers have challenged us to innovate and grow quickly, and I believe we are a better business for it.”

Always Customer First

Right from the start of COVID-19, Save-On-Foods stayed plugged into the needs of their communities.

“Community is everything and supporting our communities – including our more than 2,500 local grocers, producers and suppliers – is one of our biggest priorities,” says Julie Dickson, managing director of corporate services and public affairs for the B.C.-based grocery chain.

In addition to working around the clock to ensure that stores were, and still are being replenished quickly and with as much locally purchased inventory as possible, the retailer adjusted operating hours to provide a quieter, more comfortable shopping environment for seniors, and shoppers who are differently-abled. They also adjusted eCommerce ordering system to accommodate special requests for these same groups, as well as essential service providers.

“Our eCommerce offering was a very important part of our service delivery during the first phases of Canada’s COVID-19 response and continues to be today. Customers really seem to appreciate our unique eCommerce offering, not only because they know the people who are picking and delivering their orders, but also because it’s a great tool to help plan their shop,” explains Dickson, adding Save-On-Foods proudly led the way with its unique click & collect and home delivery combination six years ago.

With a surge in eCommerce demand, the grocer amplified customer service, quickly hiring additional team members, putting more delivery vans on the road, and ensuring the highest standards of sanitization and safety protocols in place to protect team members and customers.

Save-On-Foods also took immediate steps to make sure they were able to provide continued support, including the provision of food, to the charity partners who rely on them throughout the year. From providing additional support to local food banks, to helping provide meal support to vulnerable kids in school communities, to arranging special orders for first nations and remote communities, the retailer aimed to do their best to provide resources, tools, information, and broader community connections to those in need.

All their efforts did not go unnoticed or unappreciated. Dickson states customers have shown their support by posting signs on store windows, delivering coffee, donuts, pizza and other treats to the store teams, and making retailers a stop on their vehicle parades in support of essential workers.

“This pandemic quickly showed the world what we already knew: that our team members are doing essential work,” she says. “We’ve heard this said so many times, by so many people, but it is so true: that we really are, all in this together.”

A Helping Hand

As a small food producer getting your skus on shelves is a struggle even in the best of times. Understanding some of these companies wouldn’t survive the pandemic, London Drugs launched the Local Central initiative, which gave shelf space to local companies across the country.

More than 1,200 Western Canadian companies submitted products for consideration to be made available through the program, which started to roll out in May. Customers will continue to see these are small local companies, who generally use local ingredients where possible, even as COVID-19 comes to a close.

 

“We have been humbled by their stories and more passionate than ever to support our local companies through these trying times,” said Clint Mahlman, London Drugs president and chief operating officer. “We are excited at the prospect of continuing to grow Local Central to help more local businesses.”

Take Care

Sobeys Inc. has a history of giving back, and when their local communities truly needed them, the retailer delivered – literally.

“We have seen an increase in Canadians calling for more ways to shop. While brick and mortar is the cornerstone of our business, online grocery ordering and home delivery will be a major player in the future of grocery retail,” says Scott Chollak, vice-president of Alberta Operations, Sobeys Inc.

On June 22, the chain rolled out Voila by Sobeys, a service that blends online grocery ordering, automated fulfillment, and home delivery. Robots assemble orders efficiently and safely, resulting in minimal product handling, while Voilà personnel deliver orders directly to a customer’s home in one-hour time windows. The Voilà service will offer a selection of up to 39,000 products, including fresh fruit and vegetables, at prices comparable to those at Sobeys stores. While the service is currently only in Ontario, the retailer plans to expand the program. “This first-of-its-kind service in Canada will fill a much needed void in the market and position us to continue to meet the changing needs of Canadian families,” says Chollak.

Meeting the needs of their customers and communities was of course of the utmost concern during COVID. Through their newly formed Community Action Fund, over 900 communities received support from 1,500 stores equaling millions of dollars, and, addressing the emergency needs facing frontline community organizations as a result of the pandemic.

“Food banks, youth shelters, school lunch programs, church pantries, homeless shelters and so many more across Canada were able to use our donations to secure the essentials they needed to get through these challenging times,” says Chollak.

They also ensured their own teammates were well taken care of as they played a vital role in providing Canadians with the food, medicine, and essentials they need for their families. The retailer was the first to adopt a Hero Pay program, which included added income, no matter the amount of hours worked in a week, additional pay when work weeks surpassed 20 hours, and support for those who had to self quarantine or take time off to care for children or dependents.

Since the start of COVID-19, Sobeys has invested over a $140 million, mostly in the Hero Pay program and additional safety procedures and equipment. “Our teams showed up for Canadians when they needed us most and we are all grateful for their hard work, compassion and commitment,” says Chollak. “It has been remarkable to see the different ways our teams and customers have supported one another. We are overwhelmed with the amount of heartwarming stories, a true testament to our companies deep rooted family values.”

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Callout: Even after the March spike, Statistics Canada reported grocery store receipts continued to rise, on a historical basis, over the next three weeks, with year-over-year sales rising 19 per cent in the week ending April 11.

 

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