DODGE CENTER — When Brandon Wright orders product for the shelves at Sunshine Foods in Dodge Center, he understands that when the delivery truck arrives, there will be some items on back order
“I’m probably getting about 60% of what I order,” Wright said. “Certain areas are way better. But others, like dry grocery items, are not.”
Dry, shelf-stable noodles are one of the worst, Wright said. And with Mexican avocados not available, that fruit can be hard to order, especially with the price of the items.
Still, the shelves are, pretty much, full at the store.
And, other than some special items like those avocados, which have seen their cost soar, the price has crept upward.
Brent Bosch, general manager of Sunshine Foods, a Sioux Falls, S.D., grocery chain with 16 stores, three in Southeast Minnesota, said grocery stores will continue to see price increases through 2022.
“It’s been pretty bad the last year and a half, but it’s gotten worse in last couple of months,” Bosch said. “The pipeline has been depleted of everything.”
Bosch isn’t just talking about food items, though that’s part of the problem. The bigger issue is that food manufacturers are running short on raw materials that go into packaging, such as plastic resin for bottles, aluminum cans and glass.
The problem started with the COVID-19 pandemic, Bosch said, when recycling essentially took a break, so those materials did not go into the recycling pipeline. The effects of that are still being seen today.
Before COVID, he said, when you ordered products 99 percent of the items showed up on the semi. That, he said, is way down.
Today, with commodities like flour and sugar in short supply, it can be hard to get the items you’re used to ordering. However, the store orders most of its product through a wholesale coop called Associated Wholesale Grocers, which has 11 distribution centers serving thousands of grocery stores. So, if a particular brand is not available, stores can order a replacement brand to fill the shelves.
The third area where grocery stores are being impacted, Bosch said, is transportation.
Brian Todd / Post Bulletin
Chris Wagner, manger of Island Market in Pine Island, said freight costs alone are adding half or three-quarters a percent to inflation costs.
He added that certain items such as meat have seen a larger rise in wholesale cost, which adds to the overall price increase consumers are seeing.
Bosch said overall, the grocery industry has seen about 4% inflation, but that could rise to 7-9% by the end of the year.
The biggest concern, Bosch said, is the loss of specialty items. For example, ice cream companies tend to use the winter months to make their novelty items then deep-freeze them for the summer.
But most big dairy manufacturers are dealing with their own supply chain issues, plus due to COVID they still have a labor shortage that reduces their efficiency.
The same is true across food manufacturing. For example, he said, Campbell’s Soup can only keep up with supply of their most popular items, meaning specialty soups are in short supply.
“In any given commodity group, there’s nothing we can’t get,” Bosch said.
Wright said that while the lack of variety and price increases are noticed by customers, he really doesn’t hear any complaints.
“Most people are like, wow that’s expensive, but then they’ll just buy it,” Wright said. “I don’t get questioned too much about pricing. People are cooking at home more, and for the most part people are understanding.”
Wagner said he’s also able to keep his shelves full, and customers seem to be understanding.
“There’s a lot of stuff we haven’t been able get, but there’s substitute brands,” Wagner said.
Wright said the hardest part of the supply and inflation problems grocers are facing is that stores have had to take a close look at their profit margins on just about every type of item.
“Some margins I remain thin on, because I want to keep a competitive stance,” he said. “We’ve definitely gone over a fair bit of our pricing, but we’re as thin as we’re going to get.”
In the end, he hopes customers understand that their local stores aren’t driving these price increases.
“We’re the ones on the short end of the stick here,” he said. “But if you want to keep you local store, you need support your local businesses.”
Brian Todd / Post Bulletin
