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Grocery store rationing is back, but relax: The supply chain is doing fine

By Sam Dean, Los Angeles Times on

Published in Business News

But the world changed in March. "We went through six months of toilet paper in about six days back in the first surge," Green said. This time around, he has seen demand more than double just in the past week.

To prepare, Thrive went vertical in its warehouse for the first time. Historically, Green said, "our product is on the ground" for easy access. Now, "we not only need to use the 700,000 square feet of ground space but have stacked up multiple stories of pallets."

Retailers have also gotten creative, cutting deals with lesser-known manufacturers that typically produce toilet paper and cleaning products for restaurants and office buildings to make more store-brand products, which can fill the shelves when name brands sell out.

"There's a tremendous shift by the smart, strategic retailers in source of supply, drawing from excess inventory that was choking the food service and institutional manufacturers," said Burt P. Flickinger III, managing director of the retail consultancy Strategic Resource Group. With most restaurants, hotels, offices and large venues closed due to the pandemic, that pivot has allowed the paper-goods market to meet elevated consumer demand.

The same holds true for cleaning products, according to Curry at Albertsons. Popular name-brand items, such as Clorox Disinfecting Wipes, have remained in short supply all year, so the grocer has started sourcing more of its own.

But the logistical difficulties of getting all that product from regional distribution centers to stores can pose a challenge. The disruptions to the global supply chain that began when the coronavirus first triggered lockdowns in China are still working their way through the system today, altering the typical delivery and shipment calendar for all sorts of consumer goods. The Port of Long Beach in Southern California notched record-high volumes in October and into November, when in a typical year, the holiday shipping rush would have wound down earlier in the fall.

 

"Whether it's imports going to distribution centers or food logistics, they spill over into each other," said Shih, as businesses compete for space on ships, trucks and trains.

The downturn in the restaurant and institutional food service industry, however, has again proved a godsend for the grocery business.

When consumer demand for fresh produce spiked at the beginning of the pandemic, "refrigerated warehouses and refrigerated trucks were all kind of bulging in capacity," said Michael Castagnetto, president of the produce division of logistics company C.H. Robinson. His company was able to tap into small regional warehouses typically used to store restaurant supplies, a strategy that helped grocers ride out the first wave.

The same customers that needed that extra cold storage in the spring got back in touch just last week, Castagnetto said, saying they need help again, "probably through New Year's."

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