Empty grocery shelves return due to sick employees, supply chain delays

Bread row shelves at Target are nearly empty as U.S. supply chain disruptions continue in Washington, D.C., January 9, 2022.

Sarah Silbiger | Reuters

Empty shelves have returned to supermarkets as grocery workers announce illness and food trucks arrive late.

This is one of the more recent results of the omicron variant, which is labor-intensive. Investors are seeing the pressure and are preparing for a longer period of high labor, transportation and food costs.

Shares in major grocery stores including Albertsons, Kroger and Walmart fell on Tuesday. Albertsons shares fell 9.75% to $ 28.79 at the close after the company detailed the supply chain problems and inflated costs it sees in its income statement. The drop in its stock came despite the grocer raising its FY2021 forecast. Kroger’s shares fell about 3%, while Walmart’s shares fell less than 1%.

Covid cases and hospitalizations are breaking records in the US as the highly contagious variant spreads. There were about 1.5 million new cases in the country on Monday, according to data compiled by Johns Hopkins University. Hospital admissions exceeded last winter’s peak, with 144,441 Americans hospitalized with the virus as of Sunday, according to data tracked by the Department of Health and Human Services.

Workers feel the tension

Grocery store workers also feel the effects of the omicron. Samantha Webster helps fill refrigerators with butter, gallons of milk and more as a dairy product manager at a Safeway store in the San Francisco Bay Area. Safeway is owned by Albertsons.

Since the beginning of December, more and more employees have been forced to leave their jobs due to Covid infection or close contact with a sick person, she said. She said 15 employees are currently laid off from the store’s nearly 60 employees.

Fewer pallets are coming in from Safeway warehouses and there are not enough grocery workers to help unload them, she said.

There are holes in the dairy section where cream cheese and yoghurts used to be. Fresh bagels and loaves of bread are missing from the bakery aisle. And in the grocery section, potatoes are running out.

Other aisles also show signs of overexertion, she said, like a shelf filled with cans of clam soup because other options like minestrone and pea soup haven’t arrived.

“The shelves are getting more and more bare,” she said. “One person cannot support an entire department.”

CEO Says Covid Extends Out Of Stock

Albertsons CEO Vivek Sankaran said by phone that for several months the grocer had low stocks or missing items in some categories. He said the latest spike in Covid cases is prolonging the lack of some of these items.

“We expected supply issues to be more resolved as we enter this period right now,” he said by phone. “Omicron had a bit of an impact on this. So there are still supply issues and we expect more supply issues over the next four to six weeks. “

A new variant of the coronavirus exacerbating labor shortages across all industries, from restaurants and retailers to airlines. Company executives are forced to make tough decisions such as cutting opening hours, canceling flights and closing stores. This started to show in sales figures as well. Lululemon is among retailers that have warned that fourth-quarter earnings and revenues will be lower than expected as the company feels the impact of reduced working hours and limited staff.

For grocers, however, the problem may be felt more because it is a marginal business, where companies often have less opportunity to raise employee wages, pay overtime, or pass higher costs onto customers. Some buyers have less money to spend. The Child Tax Credit, which provided families with monthly payments, ended in December.

Albertsons executives said Tuesday that ingredient, packaging, shipping and labor costs have risen. They said the grocer had survived some of that inflation, but had tried to keep the prices of essential goods that shoppers often buy in.

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