From the desk of the ALA President 11/11/20

Quotes of note

 “I am concerned that we not go too far in the assessments by management offices without equal input from policy officials. I use as an example, the DoD Education Activity and Commissaries.” “These institutions are ripe for efficiencies, but they are also highly ranked benefits by our military families. A pure business approach to these and other areas might result in measures that might save money but have an adverse impact on our military families and service member retention.”  Todd Weiler, assistant secretary of defense for manpower and reserve affairs under President Obama.

“During the COVID-19 pandemic, our lifestyles have significantly changed. Teleworking, homeschooling, and families at home are causing extreme spikes in demand for laptops, printers, home office supplies, kitchen appliances, exercise equipment, etc. Major shifts in consumer buying, combined with COVID-related manufacturer and supply chain constraints, are creating product availability challenges across the retail industry.”  AAFES CEO Tom Shull. 

“Of course, product on the shelf … that is our number-one priority and number-one ask right now as we are going into the holidays.”  DeCA Director of Sales Tracie Russ at the ALA November 11 Joint Business Planning Conference.

“You don’t want to put something on promotion, and then the consumer looks through the circular and says, ‘I’m going to go to the store and buy that,’ and then you can’t get it, right? You have to be very selective about what you’re going to promote now, and you try to get guarantees from your supply lines that it’s coming in. But even with all of that, it doesn’t happen. That’s what we’re all dealing with.”  Krasdale’s CEO Steve Silver.

Saluting our Veterans.  Today the Nation pauses to honor its Veterans.  The ALA and its member companies are proud to be associated with the military resale system and with virtual and on-base support services–a powerful engine in providing support to our Veterans not just today but each and every day of the year.  We salute the sacrifice of today’s generation and all of the generations that came before this to preserve our cherished freedom.  A series of  “In Recognition of” events are being held throughout November, the Army and Air Force, Navy, Marine Corps and Coast Guard exchanges and Defense Commissary Agency are joining forces to salute the selfless service of all who have worn the nation’s uniform.  ALA is a proud sponsor of these events.

Since 2017, Army & Air Force Exchange Service (AAFES) shoppers have donated nearly $2.46 million to Army Emergency Relief (AER) and the Air Force Assistance Fund (AFAF).  It’s a partnership that has taken on even greater importance during the COVID-19 pandemic.  “This has been an exceptionally difficult year for our military community, but some have been hit harder than others,” said Exchange Director/Chief Executive Officer (CEO) Tom Shull. “Making a contribution to AFAF or AER is more appreciated than ever as the necessity for support increases.”  The Exchange gives shoppers the opportunity to donate to AER or AFAF every time they make a purchase in stores or online at ShopMyExchange.com. The Exchange also connects shoppers with the organizations’ critical support resources through the online Exchange Community Hub. Additionally, the AAFES-administered Military Star Card offers support for cardholders experiencing hardship as a result of COVID-19 as well as natural disasters.

AAFES is providing careers for the military community as it closes in on its goal to hire 50,000 Veterans and military spouses by the end of 2020. Since 2013, the Exchange has hired more than 46,000 Veterans and military spouses. Today, approximately 85% of Exchange associates share a connection with the military. “Working for the Exchange is a Quality-of-Life force multiplier for military families, with Veterans and spouses receiving hiring preference. The Exchange’s associate transfer program gives military spouses an opportunity to retain employment through PCSs, allowing them to keep their benefits and offering retirement opportunities as they move with their Soldier or Airmen,” said AAFES CEO Tom Shull.

Happy 245th Birthday U.S. Marine Corps.  A message from General David S. Berger sums it up…some excerpts: “In a world of seemingly relentless change and uncertainty, some things remain constant–our core values: Honor, Courage, and Commitment. These values are at the very heart of our ability to be, “most ready when the Nation is least ready.” It’s honor that gives us an uncompromising sense of personal integrity and accountability; courage that allows us to face any circumstance with an ironclad resolve to do what’s right; and commitment that binds us together as a family and drives us toward excellence. And while our core values might never change, the way we give life to them requires constant vigilance. This year’s national conversations about race remind us that we must all do better to embody our service’s values.

 “Commemorating the 245th birthday of our Corps offers us a chance to reflect on our history. We who serve today stand upon the shoulders of giants. While this year’s many challenges are significant and unique, they are not unprecedented, and it is important to remember that our Nation and Corps have endured difficult times in our past. This year, for example, marks the 75th anniversary of brutal battles in the Pacific; when soldiers of the sea defined the term “uncommon valor” on the black sands of Iwo Jima; the 70th anniversary of bitter fighting at Inchon and Chosin Reservoir; 55 years since Marines landed at Da Nang; and a decade since our struggle with the Taliban in the Helmand River Valley. We remember the service and sacrifice of all Marines, and honor the legacy passed down through generations.”

Senate appropriators move their Defense Bill—DeCA appropriation and Tobacco limitations.    DeCA funded at budget request of $1.146 billion.   Military pay raise of 3 percent.  The Committee also included this language on Tobacco: “Tobacco Use in the Military. —Tobacco use is the leading cause of preventable death in the United States, with more than 480,000 deaths attributable to cigarette smoking each year. The Department of Defense has affirmed the goal of a tobacco-free military and has implemented a range of programs including public education campaigns, the banning of all tobacco use during basic training, and the prohibition of tobacco use by instructors in the presence of students. The Committee supports the Secretary of Defense’s Policy Memorandum 16–001 from April 8, 2016, directing the military services ‘‘to ensure a comprehensive tobacco policy that assists with preventing initiation of tobacco use, helping those who want to quit using tobacco succeed, and decreasing exposure to second-hand smoke for all our people.’’ As a result, the Committee retains a provision from the Department of Defense Appropriations Act, 2020 (Public Law 116–93) directing the elimination of the price subsidy provided to tobacco products at military exchanges.”

Senator Tom Tillis (R-N.C.) wins re-election after his opponent conceded.  Tillis is the chairman of the Personnel Subcommittee, Senate Armed Services Committee.  This subcommittee has jurisdiction over military resale matters.  Tillis’s win raises the stakes on a run-off election in Georgia in January that could decide who controls the Senate.

McDonalds menu changes.  McDonald’s Corp. is making changes to its menu and restaurant operations as the corona-virus pandemic persists, including an emphasis on to-go orders and new “McPlant” vegetarian items. The burger company said Monday that it would test a slate of new plant-based products in some markets next year.  Many chains have cut deals with plant-based meat manufacturers last year, including Burger King’s partnership with Impossible Foods and Dunkin’ Brands Group Inc.’s deal with Beyond Meat. Beyond Meat and Impossible Foods have both added manufacturing capacity to meet rising demand for their products. McDonald’s said it is also exploring its own delivery service in some markets with high demand, including Australia and Germany.  Rising numbers of coronavirus cases are closing dining rooms in some places again. McDonald’s said government restrictions on restaurant hours, dine-in capacity and dining rooms since September are hurting its operations, particularly in markets outside the U.S. such as France, Germany, Canada and the U.K.  McDonald’s recently set a plan for closed dining rooms in the U.S. to reopen if cases of Covid-19 fall locally over time.

Military resale paragon.  A huge shout out to a great advocate for military folks.  Michael Kelly is celebrating 50 years with DoD.  Mike has “Re-enlisted” in DoD after dealing with some health issues.  Kelly is currently Special Assistant to the Deputy Assistant Secretary for Military Community and Family Policy.  Art Myers, another long-time DoD resale advocate and colleague of Kelly said: “When I was Deputy Director of Services and later Director of Services, Mike Kelly was the one person I could always depend on to assist in whatever, seven days a week/24 hour a day!”  I also have been privileged to work with Mike over the years.    Mike, thank you.  Our system, our military and the Nation is better off because of your service and we wish you and yours health, happiness and continued success.

 Vaccine next month?  General Gustave Parna, head of Operation Warp Speed, says:  “I think a safe and effective vaccine will be available initially in December.”   Perna is chief operating officer for Operation Warp Speed, the government’s initiative to fast-track the development, manufacture and distribution of COVID-19 drugs and treatments. The tens of millions of vaccine doses that Perna says could be available in December is the combined number of vaccine doses that Pfizer and Moderna, manufacturers of the two candidates furthest along in clinical trials, could have ready to ship by then. Being prepared to have large quantities of the COVID-19 candidate vaccines ready for distribution as soon as one is authorized as safe and effective by the FDA has been a major feat of planning and coordination that runs counter to the typical drug and vaccine development process.  “Generally, you don’t start manufacturing a vaccine until you have an [approval],” Perna explains. But waiting for an OK from the FDA before ramping up production would have greatly prolonged the timeline for getting a COVID-19 vaccine out to the public.  So early on, the Operation Warp Speed team invested in manufacturing capacity. “We needed brick and mortar,” Perna says. “We needed trained employees. We needed to have all the materials, and we needed very technical machinery to produce the vaccine.”  “We started executing manufacturing requirements in parallel with the development and the trials of the vaccines,” he says.

“We’re partnering with commercial industry to do the actual distribution, because they know how to do it,” he says, “They do it every year, with influenza and other medications and vaccines.”  Pfizer has an assembly center in Kalamazoo, Mich., and plans to use private carriers such as UPS and FedEx to deliver vaccines to hospitals and vaccination sites. Vaccines from Moderna and other Operation Warp Speed candidate vaccines would likely be moved by the medical supply company McKesson, which has a contract with the government to distribute COVID-19 vaccines.  The government will be allocating initial vaccine supplies to which will then be responsible for getting shots into people’s arms and determining which groups get priority for those first doses. “Some of the jurisdictions have thought about mass [vaccination] campaigns. Some are going right to brick-and-mortar and working with CVS and Walgreens. Some are going to utilize their hospitals,” and the places people can go to get vaccines may shift as more doses become available, Perna says.

Outlook for Defense under Biden.  Under a Biden Administration analysists are saying drastic cuts to Defense are unlikely.  Republicans have historically supported a large defense budget, and most Democrats showed earlier this year that they don’t support deep cuts either when the party’s progressive wing unsuccessfully pushed for a 10% cut to use the funds to tackle the fallout from the coronavirus pandemic.  The size of the fiscal 2021 defense budget is already locked in under a bipartisan budget agreement, and the next president’s 2022 budget request is due in February.  More details of the defense programs Biden may want to prioritize — and those he may want to cut — will only come with the 2023 budget request, according to Todd Harrison, the director of defense budget analysis at the Center for Strategic and International Studies and a frequent ALA speaker.   “It’s not until you get to the second budget request of a new administration that you start to see real change, because that will be one that they developed from the beginning to the end,” he said.  Also, under a Biden Administration, several Trump policies would be slowed or killed including the wholesale relocation of forces from Germany and the Executive Order on Diversity Training.

The Presidential Election hasn’t been officially decided yet, but the Biden Defense Department transition team is shaping up.  Kathleen Hicks, a senior vice president for the Center for Strategic and International Studies, will lead the DoD team. Hicks had several roles in the department under the Obama administration, including as principal deputy undersecretary of defense for policy and deputy undersecretary of defense for strategy, plans, and forces.    Other team members include:

Debra Wada, a former assistant secretary of the Army (Manpower & Reserve Affairs) and longtime House Armed Services Committee staffer

Sharon Burke of the New America think tank, a former assistant secretary of defense for operational energy

Susanna Blume of the Center for a New American Security, who served as deputy chief of staff for programs and plans under Bob Work

Lisa Coe of OtherSide Consulting, a defense industry consultant

Melissa Dalton of the Center for Strategic and International Studies, who has held a number of jobs in the Pentagon

John Estrada, a Marine Corps veteran who was appointed as ambassador to the Republic of Trinidad and Tobago towards the end of the Obama administration

Victor Garcia of Rebellion Defense, a former director of engineering for the U.S. Digital Service

Karen Gibson, a retired Army lieutenant general who retired in March as deputy director of National Intelligence for National Security Partnerships

Michelle Howard, a retired four-star admiral who became the first woman to serve as vice chief of staff for any military branch

Andrew Hunter of the Center for Strategic and International Studies, a known acquisition expert

Mike McCord of the Stennis Center for Public Service, a former DoD comptroller during the Obama administration

Farooq Mitha, who served as special assistant to the director of the Department of Defense Office of Small Business Programs under Obama and as a senior advisor on Muslim American engagement for the Biden campaign

Frank Mora for Florida International University, a former deputy assistant secretary of defense for the Western Hemisphere under Obama

Michael Negron, a Navy vet with ties to former Obama Chief of Staff Rahm Emanuel who is currently assistant director at the Department of Commerce and Economic Opportunity to the state of Illinois

Stacie Pettyjohn of the RAND Corporation, an expert in wargaming who works on strategy and doctrine issues

Ely Ratner of the Center for a New American Security, Biden’s deputy national security adviser during the Obama administration

Deborah Rosenblum of the Nuclear Threat Initiative, a nuclear expert who has been part of negotiations with North Korea

Lisa Sawyer of JPMorgan Chase, who worked a number of jobs at both the Pentagon and National Security Council

Shawn Skelly of CACI International, a Navy vet, former commissioner on the National Commission on Military, National, and Public Service and vice-president of the Out in National Security group

Terri Tanielian of the RAND Corporation, who focuses on military and veteran health issues

Veronica Valdez, a former special assistant to both Navy and Air Force leadership, currently with the Port of Seattle

Transition fun fact.  During the transition from one Administration to another, 4000 government jobs are at stake, including 1250 that need Senate confirmation.

One-Source mobile app.  The Department of Defense launched a new mobile app that quickly connects service members, their families, and survivors to resources and support to help them rejuvenate, be well, and thrive. The My Military OneSource mobile app is now available for free download on Google Play and Apple’s App Store.  The My Military OneSource mobile app provides a customized way for users to experience one of the military’s flagship support programs – Military OneSource. The app offers a fast, 24/7 gateway to personalized military benefits, access to experts, guides for the military, and much more.   “We are excited to offer an innovative, personalized approach to receiving support, resources, and expertise through the My Military OneSource mobile app, in the same way our folks are used to receiving other information in their lives” said Matthew P. Donovan, Under Secretary of Defense for Personnel and Readiness. “The Department of Defense is committed to providing valuable support to help our military service members and families thrive, and this mobile app was developed with their needs in mind.”

House and Senate Armed Services are expected to soon launch negotiations to finalize their competing two NDAA bills by early December.  A number of policies affecting resale programs are included in the negotiations. 

December 11 is the latest government shutdown threat. But most say that the Congress won’t let appropriations expire and will continue to keep the Government open. What’s in question is whether they will get a full year appropriation or kick the can another few weeks or months until they can get their act together on funding the Government for the remainder of 2021.

Stimulus II.  What’s more in question is another Stimulus Bill.  A deal is on the table, but complicated election politics is creating serious questions as to whether they can agree.  Stay tuned.   

Retail Darwinism.  It’s survival of the fittest or survival of the companies that had strong balance sheets going into the pandemic.  Note:  After vaccine progress was announced on November 9, Simon Properties (mall real estate firm) stock rose 28 percent.  Ralph Lauren up 20 percent, Nordstrom up 26 percent, Gap up 8 percent.

Hy-Vee grocers has deployed coronavirus testing to 165 drive-thru pharmacies and extended testing hours at 21 drive-up pharmacy locations.  To get a COVID test from Hy-Vee, customers must first online to receive a test voucher number, at which time they also will be given a specific testing site and an appointment time. Individuals don’t need to have COVID-19 symptoms to be tested, the retailer noted.

Logistics payrolls soared in October as inventory restocking after coronavirus lockdowns and strong online sales fueled a hiring surge at distribution and transport companies.  Warehousing and storage companies, which include the sites where workers fulfill online orders, added 28,100 jobs in October, the third straight month of gains. The sector has added 76,500 jobs since October 2019.  Parcel carriers that deliver packages to homes and businesses also notched gains, adding 8,300 jobs last month. Courier and messenger payrolls have grown by 98,800 positions since February as carriers scrambled to meet a wave of delivery demand that has some companies putting off potential new customers until next year.

Adobe Analytics, which tracks activity on thousands of websites, expects U.S. online holiday sales will total $189 billion, up 33% from last year.

LaserShip Inc., a regional delivery company in the eastern U.S., put conversations with new customers on hold in July to ensure it had enough capacity to serve existing clients. “I can’t burn what’s in my right hand to pick up something in my left,” said Josh Dinneen, LaserShip’s chief commercial officer. “We’re not starting new business until January.”  Trucking companies, riding a wave of strong freight demand, added 9,600 jobs in October as retailers and manufacturers rush to restock depleted inventories after months of lockdown. It was the second-largest gain in hiring since April, when the pandemic brought much of the U.S. economy to a halt and the sector lost 92,000 jobs. Many trucking companies now are reporting difficulty bringing on new drivers

The lack of widespread contact tracing in the U.S. has made it difficult to determine whether restaurants are facilitating the spread of the coronavirus, but federal and state studies indicate some connection. A U.S. Centers for Disease Control and Prevention survey in September found that people who tested positive for Covid-19 were about twice as likely to have dined at a restaurant within a two-week period as people who tested negative for the virus.

Hormel supports Marine Corps families.  Hormel, Inc. has come up with a way to partner with USO-Metro to celebrate U.S. military servicepeople and their families in a safe manner. Enter the summer evening drive-in movie.  Working from their home offices near Austin, members of the Hormel® Natural Choice® brand team worked in collaboration with the USO-Metro team to stage the Good Feeds Us All event on Marine Corps Base Quantico, near Triangle, Virginia. Families – many of whom had never experienced a drive-in movie – were treated to a showing of “Spiderman,” food from Hormel® Natural Choice® and an opportunity to be together and with other families serving the United States in the midst of a pandemic. Members of the USO-Metro team and local volunteers helped execute the celebration.  “Those types of events create really special memories that bond the family,” said Col. William Bentley, CEO of Marine Corp installations, national capital region Marine Corps based Quantico. He added that in all activities aimed at bringing people together, USO activities among them, food is integral. “I don’t think you can have any event without a gathering around the table, so to speak. It really just creates that community-type feeling where you’re breaking bread and you’re sharing with other people.”

Collaborating for sales increases.  ALA’s Larry Lapka reports on the November 10 ALA and DeCA’s joint business planning session as DeCA’s Tracie Russ and her team of category managers work with industry to drive sales.  (Special thanks for engineering the conference to the DeCA team Tracie Russ, Barbara Merriweather, Bridget Bennett, Darrell Clary, Iveena Henderson, Jessica Stables, LaRue Smith, and Rena Dial.  Also, to ALA’s Stephanie Supplee (Coastal Pacific Food Distributors), Mike Bender (Procter and Gamble), Amanda Herold (EURPAC), Alex Sizemore (EURPAC), and Andy Harb (A.C. Nielsen).  Thank you to sponsors of the DeCA Joint Business Planning Session:  Sandboxx, Unilever and Kellogg’s, Advantage, and Purina.)

Availability of product on store shelves and ensuring that the products that patrons want are available in their local commissaries, was the over-arching theme.

The event highlighted the problems the commissaries were having in keeping shelves fully stocked during the pandemic, and how a union of agency executives and business leaders, together, will help to alleviate empty shelf problems.  “Of course, product on the shelf … that is our number-one priority and number-one ask right now as we are going into the holidays,” said DeCA Sales Director Tracie Russ. “Please help us with identifying the appropriate products that should be on the shelf.”  Russ characterized that as “something of a strange ask, because we have presented these items to you, we have identified them in the system, and the stores should be ordering them.  “But we all know that the supply chain is challenged, and there are items that are on allocation, there are items that are not coming in, we’ve ‘H-coded’ some items, and there are some items that are still sitting with regular stock codes, we’re having challenges with.”

Russ stated that both DeCA and its industry partners “need to help the stores execute and present full shelves. Are the shelves going to be what every planogram looks like? Maybe not. The shelves might have facings spread out of items that are available. The shelves might have some one-time-buy (OTB) opportunities. The shelves might have a full shelf of the same item. “It might look different than our planograms in several of these categories that are severely challenged, but you want to present a full shelf as we are moving through the holidays and into the new year, and until we can get the supply chain under control.”

Russ said that DeCA is “going to need some help with” H-coded items. “We have seen some movement on some of them, we don’t have items H-coded as we once had — we’ve either moved them into a ‘P-coded’ status or we have returned them to their original RSL code — but I am not sure that all the items that should be H-coded or even turned off for ordering have been done so.

“We need your help in identifying these items. We need you to work with each of the category teams to review these items and let us know the status. It is not helping us to have the stores order these items over and over and over again; in fact, it is making our fill rates look worse. As you continue to order an item and it doesn’t come in, it just piles on with the fill rate. We would like to move some of the noise out of the system so the stores can focus on the items that are available. “If the item is not coming back to the shelf this year, we want to move it out of ordering. We want to focus on items that are available.”

Russ asked, “How can we help the stores present full shelves? My team is working with many of you trying to manage all of the items that are constantly changing from available allocation to not available, and product availability, product on shelf is our top concern, right up there with our savings.

“Having the product available is a priority. It doesn’t do any good to create these plans to promote the savings if when the customer comes in to make a purchase, the product is not available. We have fallen short, and we are at that time of year when customers are buying all of their holiday meals, and we want them to think about the commissary when they are purchasing for the holidays.

“So, I ask you, do you have suggestions, ideas, other ways of doing this? We are open to these suggestions. We want product on the shelf when the customer goes in to purchase product.”

Russ noted that she, herself, does about 98 percent of her grocery shopping in the commissaries and she has seen an interesting situation developing with her fellow shoppers.

“The perception to the customer is that when they see certain categories are empty, if the rest of the store is full, the thought is, ‘I spent $250, but that commissary didn’t have anything I wanted to buy. They didn’t have my items on the shelf, my favorite items.’

“Other retailers are filling their shelves with other or optional items, and we need to do the same in these categories to the extent that it is possible.”

Russ asked attendees, “Bring us your ideas, but right now, please concentrate on product on the shelf. Please work with us, tell us what is going on, help us to get through this time and have product on the shelf during this holiday time, so when the customer goes to shop the category, there is selection there. There are full shelves.

“We want customers to love their benefit, and we need product on our shelves.”

DeCA’s category management team was present at the meeting, and some gave their input about filling store shelves, or at the very least giving the perception that the shelves are fuller.

Russ said that this team has been out to as many stores as possible in recent weeks, and “we can see the struggles the stores are going through. That’s why we really need to focus in on the products that are available. We’ll worry about the fallout after we get through this, but right now, we need to focus in on products that are available.”

Category Manager LaRue Smith noted that thus far, it appears that DeCA’s needs, from his perspective and categories, are aligned with those of industry.

“We did not see the COVID-19 coming,” he said. “We got hit in the face with a pile of bricks. But when we came together, collectively, that is when things started happening. I am proud to say that the partnership and collaborative spirit gave us a real jump start. We are not out of the woods yet, it is still going on, but with your help and your support, we have successfully provided our customers with those high-demand items, like face masks, sanitizers, thermometers and more. And we are still working on it. Things are going to get better, as long as we stay together and continue pulling in the same direction.”

As far as health and beauty care items, Smith said that with the situation at hand, “We’re not going to even attempt to do everything, but we have landed on some core things. We are aligned. Product availability for the next year … we have to keep on focusing on having products on the shelves. If we don’t have that, the customer won’t come, and if they do come, they are not going to stay.

“Tie-ins, we are going to focus on that, expand store brands where it really makes business sense to do so, we’re going to lean heavily in that direction. New item innovations, that is the lifeblood of any category, so we are going to have to be quicker and decisive. We have to work quickly to take advantage of those new item launches.”

Smith also said that social media engagement is an area that he would like to see “taken to the next level. Young shoppers and single shoppers are not coming to the commissary. We have got to find a way to literally engage our shoppers who have this valuable benefit so they will take advantage of it. We need to take advantage of those new item launches so that we can actually give these groups some incentive to want to come to the commissary.”

Smith added that the annual promotion plan “will be put back on the table. We realized how much value was involved in that, because with the amount of investment that you are putting into the promotional bucket, we want to take full advantage of that.”

He concluded, “We are going to have to take our collaborative partnership to the next level. We are in a war here to grow sales, and to stop those lagging sales.”

Category Manager Darrell Clary talked about issues related to packaged meat. “As I toured stores … sales are down to flat, but if we could get over the hump, and the way that we do that is to fall back on things that Tracie talked about which was product on the shelf, and I am looking for anything that is in the supply chain, and converting club packs, because of the size of families in DeCA, was more conducive for us to move in that direction.

“All I want to do is to remind everyone that as these items become available in the supply chain, even if we don’t carry them, get those in front of my team so we can get them in. As Tracie said, we’ll clean up the pieces later, but that category is very important, and critical, for DeCA to continue to grow and to meet that sales demand. We are working toward that and it is progressively getting better.

“But when I get to the store, some of the reps are complaining that they are working it, and they are not holding, and when you see that, especially as it related to our Top 50 stores, I want to know about it, so I can get involved to trying to convey that message. To me, everything has to do with sales at the register. Sales are starting to come back, we are getting closer to that flat to down threshold, but until that is above, it will always be a concern to me, because it is the only measurement I have.”

Category Manager Rena Dial said there is “no use” in bringing one-time buys into the stores “unless they are getting onto the shelves. If we can continue to get these items, we can merchandise as a one-stop shop. But it takes all of us working together.“We have to communicate with the stores. That is part of our problem. We are not communicating. We go in and see what is missing but allow them to know that you are looking too and that you are willing to help them.”

Dial said as far as new innovations are concerned, “We want them to roll out when they are seen or advertised on the TV. Set up a desk with new innovations, and then our customers know that we have these items for them also.”

Category Manager Bridget Bennett spoke about opportunities for cross merchandising. “We can create a joint display, there are so many items that we can do this with. Let’s coordinate it. I have a sales plan for the entire year.

“It is difficult right now, with the restrictions, with the less frequent shopping … but we are trying to take advantage of whatever we can. People have money, they want to have flowers on their desks because they are sitting at home working. They are not going out to eat. So, there is a lot of opportunity in my department.   “Let us help you guys figure out what works with what we have.”

Andy Harb, associate client manager at Nielsen, noted that store restrictions placed on DeCA stores during the early months of the pandemic had a major impact on the agency’s performance during fiscal 2020 “due to shoppers just not being allowed to get on the military bases.” Although DeCA shoppers had larger baskets, trips to the base were down due to these restrictions, many of which have since been lifted or relaxed.

Other topics that Harb discussed with numerous statistics backing the findings and recommendations included online and club stores getting more of DeCA patron’s dollars; the paucity of promotions leading to higher prices; the opportunity for the agency to grow sales in selected segments; and the ability of DeCA to expand its reach with store brands, an area which has shown strong growth in the overall supermarket industry as consumers prepare for an uncertain economic future.

Pandemic grocery supply chain insights.  Revealing interview with Krasdale’s Steve Silver on pandemic supply chain.    Krasedale operates around 300 grocery stores in the Northeast.  It’s CEO had some revealing remarks recently in an interview in Supermarket News that are worth noting.   

“What’s very unusual about this episode is the supply chain is still disrupted. We’re a company that has historically fulfilled on 98% to 99% of what we would get. These days, on a good day, we’ll hit 80%. But it’s not because of us; it’s because we can’t get supplied.”   “The manufacturers, for whatever reason, haven’t tooled up appropriately, or maybe they didn’t think it would last this long. For a small or midsize regional distributor like us, we go to the bottom of the list in terms of priority. We’re certainly not Walmart, Costco or Amazon. So, it’s a constant battle to keep the supply chain going. And as you know, we don’t have a locked in audience. Our customers buy from us because it’s good to buy from us.”

“In the beginning, it was the paper products and the cleaning products, but it quickly gyrated right over to the food products. And it still is. You get one vendor under the control, and then another one goes sour on you. Again, if we’re able to fulfill on 80%, we’re doing a good job these days. And again, it’s not because we can’t ship it out; it’s because we can’t get it in. As a consequence of that, it adds a lot of cost to the system. In this business, since you’re working on such small margins, you’ve got to send out trucks full. And when you expect them to be full and they go out with 30% air, it causes a lot of problems. And that just walks its way down the supply chain. Stores can’t fill their shelves, and consumers get angry. It’s gotten better, but you would think that after six or seven months of this, we’d be closer to being back to normal. And we’re not. I don’t see anything on the horizon that says we’re going to get there anytime soon.”

“If we couldn’t get branded product, they [customers] would take our product as well. But we had a hard time getting our product in as well. With private-label product, most of it is packed at the same time as the growing season. So, if there’s a big spike in demand, and we run out of private-label product, it’s going to be a while before we get it back in. The supply issues have been across the board.”

Because they’ll fill their shelves. They’ll get product from whatever sources they can get, just to have product in their stores. Nobody likes to look at empty shelves. And in this business, which is highly promotionally driven, it’s been very difficult. You can’t run promotional programs and sales and marketing programs that you had in place. It’s been a big scramble.

You don’t want to put something on promotion, and then the consumer looks through the circular and says, ‘I’m going to go to the store and buy that,’ and then you can’t get it, right? You have to be very selective about what you’re going to promote now, and you try to get guarantees from your supply lines that it’s coming in. But even with all of that, it doesn’t happen. That’s what we’re all dealing with.

The guys that we source from are all having the same issues, maybe less severe than us or maybe worse than us. Our frozen, dairy and meat suppliers — we’re all under stress. As you know, we have many longtime, loyal customers. What we do better than anybody else is provide personal service and a lot of expertise to our stores. We have a big field force out there that helps our retailers operate. And that went dormant. Obviously, you couldn’t put all your people on the street at once, and that’s a big advantage we have over everybody, our personal contact with our customers. There’s only so much you could do via Zoom.

They just want the product from us. They were all struggling themselves. Fortunately, most of our operators stayed open. We had a few that had to close because they had problems with the illness. They were dealing with a lot more anxiety and panic than we were.

Anything you can get your hands on, staples products — canned vegetables, pastas, rices. As long as it has a shelf life, and you can get it, we can stockpile it. We’ll put it in outside storage, we’ll keep it here and we’ll spend the money to move it around.

Most of our produce suppliers, I think, are pretty much back normal. You’re going to be out here and there with certain items. But we have three or four different produce suppliers that supply our stores. Most of our guys will go right to the produce market, and it’s the same thing on the meat side. Right now, most of the supply issues are on the dry grocery side, because the demand has been pent up so much and, in my opinion, the manufacturers will take care of the Walmarts and the Krogers and the Costcos first before the small, middle-size regional distributors.

It’s all about supply. It’s not about us pushing product out. We can push it out as good as anybody. We have a whole infrastructure in place. We don’t have a problem picking it. I just have to get product in the building.

Best regards,

Stephen Rossetti

President

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