At the end of August, grocery price inflation hit a 43-year high, with U.S. retail food price inflation up 13.5 percent year over year. Consumers are feeling the pinch, while manufacturers and retailers struggle to keep supply chains moving. Thankfully, a good retail food broker can help manufacturer clients and retail partners navigate these pricing increases.
Everything from extreme weather to the war in Ukraine is contributing to grocery price inflation. Raw materials, packaging, shipping and labor all play a role. However, the right retail food broker partner can help manufacturers and grocery retailers through these challenges to effectively manage high-inflation periods. Here’s how:
Frequent and transparent communication
An effective retail food broker has a bird’s-eye view on the entire grocery ecosystem. These high-level insights can help different stakeholders connect the dots to solve problems. With wide-ranging industry knowledge, a retail food broker can be an essential touchpoint for everyone along the supply chain.
Clear and proactive communication can get all parties on the same page, including in ways that may not be obvious to one another. For instance, a broker may be able to recommend rerouting transportation for speedier delivery from a factory to a distribution center that the manufacturer hadn’t considered.
“Transparency is the one thing that we have seen be the most successful across the industry when it comes to inflation,” Erin McCulloch-Crume, Bay Food Brokerage’s Director of Perishable Sales and Emerging Business, told Deli Mart News. “At the end of the day, all inflation is being passed on; it’s just a matter of how. It’s important for us to have those conversations and make sure it’s beneficial on both ends.”
Creatively managing controllable costs
An agile approach to sourcing, pricing and promotions can give shoppers what they want, even if supply chains are constrained. Connect with a retail food broker to evaluate your company’s options. For example, this may mean promoting bulk or private label options for consumers looking for deals.
Not every grocer will raise prices on the same items in the same way. A higher-end retailer might prioritize maintaining its supply of certain niche or popular goods. A grocer focused on preserving value for its shoppers may want to explore alternative sourcing to keep prices down.
An effective retail food broker understands the bigger picture, how to accommodate different retailers’ needs, and how to work with manufacturers to meet them. Their knowledge can also play a role in navigating supply chain issues.
For example, a retail food broker knows that slower imports may prompt sourcing softer cheeses with a shorter self-life domestically rather than internationally. This opens opportunities to connect with U.S. brands, shorten delivery times and save on overseas freight costs.
We can’t do much about poultry prices when avian flu upends our pipeline of chicken and turkeys, as it has this year. But manufacturers and retailers can work with a retail food broker to mitigate big price hikes due to shrinkage.
“Our retail teams go to stores to check products, turn inventory and make sure packaging looks good on the shelf,” said Erin. “We have to be a good partner and a good steward to both our manufacturer partners and our retail partners. We make sure that we’re communicating any potential inflationary impacts to the retailer and keep them updated along the way.”
In addition, manufacturing partners, retailers and logistics teams can help reduce shrinkage with data-driven changes. In one 2020 McKinsey report, a Middle Eastern retailer significantly reduced shrinkage on sensitive grocery categories (like berries) by nearly one-third by adjusting the temperature at which the cargo was transported to the store.
Looking for a retail food broker who knows how to effectively work through high-inflation periods? Contact us today to see how we can help.