You'll Get Your Toilet Paper, But Tough Choices Have to Be Made: Grocery CEO
Solving Toilet Paper Shortage Means Hard Choices for Grocery CEO
(Bloomberg) -- Kevin Holt wants American shoppers to know one thing: You’ll get your toilet paper. You just might not get the soft, four-ply type you love.
Holt is the chief executive officer of the U.S. arm of European grocer Ahold Delhaize NV, which operates the Stop & Shop, Food Lion and Hannaford chains as well as the Peapod online supermarket. He’s on the front line of the food industry’s coronavirus restocking effort, working around the clock with suppliers, trade associations and the federal government to ensure there’s enough essential items amid consumers’ panicked stockpiling.
“I’ve never seen anything like it,” Holt said by phone Tuesday. And with restaurants in New York and other regions now closing, purveyors of fresh food like Ahold could see even more demand. “We’re entering the unknown.”
Retailers have established protocols for just about any crisis: Hurricanes, credit crunches, even active shooters. But Holt admits there’s no game plan for the coronavirus, which has forced executives to flex finely-tuned supply chains, soothe harried employees, and all the while ponder how shopping could forever change in the aftermath.
In the short term, with supply and demand of items like hand sanitizer, disinfecting wipes and toilet paper still out of whack, Ahold and its suppliers have agreed to reduce the variety of items available in certain categories. That allows manufacturers to focus on making more of just a few core products, and simplifies the replenishment process on the retailer’s end.
Simplifying Stocking
“That will simplify our stocking,” he said. “This is not just about our supply chain. It’s about all supply chains.”
Holt has made other, less perceptible changes across his 1,995 U.S. stores. In addition to cleaning checkouts and shopping carts more often, he’s removed some of the clutter in aisles, to help customers maintain some social distance. He’s adding staff and trucking routes. He’s also reduced orders of a few products -- combs, say, or light bulbs -- that aren’t in danger of being hoarded.
On the employee-benefits side, he’s looking at accelerating the accrual of sick days so new associates can access them sooner. Final decisions on benefits will be made locally by each individual store banner, however.
Finally, he’s talking with economists and other experts to try and figure out which shopping habits, adopted in haste to cope with the crisis, might prove lasting behaviors.
One likely scenario is an accelerated adoption of online grocery, which today only commands about 5% of the roughly $800 billion market. A March 13 survey from Gordon Haskett Research Advisors found that of those who bought groceries online, 41% were doing so for the first time.
E-Commerce ‘Bump’
“I do think e-commerce will get a bump out of this that will be lasting,” Holt said.
A Barclays analyst estimates that between $61 billion and $118 billion in food sales will shift from restaurants to at-home during the second quarter of 2020.
Beyond the shift to online grocery shopping, Holt isn’t sure how shopping patterns will change, but he’s sure that things won’t be the same once the nation gets past the pandemic. He recalls his grandmother, who came of age during the Great Depression and never wanted to throw anything away.
“Events like that are lasting,” he said. The coronavirus “is something I’ve never seen in retail.”
©2020 Bloomberg L.P.