As if multiple years of a global pandemic weren’t enough to throw grocers off track, last year’s extreme weather conditions and burgeoning recession have contributed to particularly taxing times in the grocery sector, especially in fresh foods. But, as our fourth-annual Canadian Grocer Produce Operations Survey reveals, produce sales continue to stabilize and grocers are optimistic about being able to meet the needs of Canadian grocery shoppers – even with ongoing supply chain issues.
In asking grocers across the country about what’s happening in their produce departments, the consensus was clear: even as consumers become more and more cost-conscious, produce is still an essential part of grocery baskets. The question now is how to meet expectations going forward while keeping produce departments profitable.
This is part two of a three-part report. Read part one here and stay tuned for more insights on CanadianGrocer.com.
Supply chain issues
It’s no surprise, perhaps, that supply chain issues topped the list of the most serious challenges facing the produce department among our survey respondents. North America continues to experience higher logistical costs compared with other areas, with unpredictable weather patterns putting even more pressure on supply chains and the retailers who rely on them. “We’re hoping this summer will provide some relief and we’ll get back to normal, but Mother Nature is a big one that we’re still struggling with,” says Shawn Jacks, senior director, fresh at Calgary Co-op. “Everyone is looking to greenhouses and vertical farms for support, but the issue right now is that they can’t grow as fast as we need them to support our businesses.”
While weather has had an impact on produce since the beginning of time, Rick Stein, vice-president of fresh foods at The Food Industry Association (FMI), says the amount of energy FMI members are consuming trying to figure out how to secure a good supply chain is becoming more and more problematic. He says long-term solutions will rely on technology to better protect supply chains in the future. “I think the innovations are going to be in the growing, shipping and packaging to extend produce life,” he says, also noting the importance of partnerships to bridge gaps during weather-related issues. Stein advises grocers to cultivate a group of suppliers “you can count on to create longer-term contracts and work out pricing issues well in advance so the supply chain isn’t disrupted.”
READ: Supply chain turbulence is here to stay, so what is Canada doing about it?
More than half (51%) of our survey respondents said they have expanded their network of produce suppliers as a result of supply chain challenges. Aaron Usher, produce category manager at Georgia Main Food Group, which operates the IGA and Fresh St. Market grocery chains in British Columbia, says strengthening relationships with local vendors ensures that when there is a pinch on products, suppliers will keep coming through for them. “We go out to local farms and meet with startup companies … and it’s about taking the time to work with them so when they bring products to market, we’re the first to get them,” says Usher.
Having two banners also means he can trial products from new suppliers. “If we bring something to market and the relationship builds and the supply chain gets going really well, we can open it up to the rest of our workforce,” he says. “We’re now working with a vertical farm just starting up that has the potential to have year-round packaged salad, which would be fantastic as we wouldn’t have to be at the mercy of what’s going on in the States.”
This article first appeared in Canadian Grocer’s March/April 2023 issue.