A newly released report finds $24 billion in COVID-19 pandemic-related costs by the U.S. food retail industry over the past year, and local grocery store representatives believe some investments are here to stay.
The report by the Food Industry Association shared grocer actions amid the pandemic related to safety, workforce and technology spending. The trade association said roughly $12 billion of investments were for increases in payroll and incentive pay. Food retailers spent $3 billion for cleaning and sanitation supplies, labor and other related expenses, and $1 billion for personal protective equipment, according to the report.
Susie Farbin-Kawamoto, co-owner of MaMa Jean’s Natural Foods Market LLC, said the Springfield company has spent around $212,000 on pandemic-related expenses over the past year. Investments included plexiglass barriers, store signage noting social distancing, face masks and a boost in the purchase and use of cleaning supplies, she said. However, the bulk of the investment total comprises around $200,000 worth of incentive pay distributed over the past year to its 168 employees.
“We call it hazard pay, but it’s really an extra thank you pay,” Farbin-Kawamoto said. “That was an extra expense that we had.”
Some of the hazard pay is connected to the stress related to enforcement of the city’s ongoing masking mandate, she said, adding face covering discussions with customers have been the most stressful part of being a business owner over the past year.
“You can’t win for losing when it comes to the mask topic,” she said. “If you enforce it, then you get called a Nazi and you get threatened to be sued. If you don’t enforce it, they get on your website and shame you. It’s been a rough one.”
Even when the city eventually lifts the masking mandate, Farbin-Kawamoto said MaMa Jean’s employees will continue to wear face coverings for the foreseeable future. However, it won’t be required of customers, she said.
“We’re not going to deny them entry, but it’s still encouraged,” she said.
Farbin-Kawamoto said the plexiglass barriers installed at the checkout stations last year were originally temporary measures. That’s no longer the case, she said.
“Installing those shields at the register as a permanent fixture is definitely on the list of things we’re going to do this year,” she said, noting new ones for all three stores will be custom made for roughly $1,800.
Hy-Vee Inc. spokesperson Christina Gayman said the Des Moines, Iowa-based company has provided face masks for all customers and over 88,000 employees at its 275 stores since the pandemic started. The store count among its eight-state footprint includes one at 1720 W. Battlefield Road.
While declining to disclose the total of Hy-Vee’s COVID-19 pandemic-related investments, Gayman said it provided nearly $168 million in bonuses and other benefits last year. Other expenses included cart sanitizing systems, social distancing and directional signage, and pharmacy prescription curbside pickup and prepay.
Gayman said the Springfield store also is among those participating in the company’s online grocery service, Aisles Online, which started in 2015 but picked up in popularity amid the pandemic.
The local store set up a pickup kiosk in the parking lot last spring to move activity away from the store’s entrances, she said, declining to disclose 2020 company or Springfield store sales data. The company averages sales of $11 billion annually, according to its website.
Aisles Online, its bolstered pharmacy offerings and Mealtime to Go, its online and mobile food ordering service launched last year, will remain long-term investments for the company, Gayman said.
“It’s hard to predict when some of the other things we have implemented will change or go away entirely,” she said via email. “We are still in the midst of the pandemic and we continue to follow all (Centers for Disease Control and Prevention), state and local departments on public health guidance.”
Like Hy-Vee, MaMa Jean’s delved into the online grocery marketplace pre-pandemic. However, Farbin-Kawamoto said the timing of her company’s debut of curbside service in January 2020 was “really lucky.” The service is offered at its 3530 E. Sunshine St. and 1110 E. Republic Road stores, although adding it to the 228 W. Sunshine St. location is still under consideration, she said.
“It’s going to be here to stay. The reason we put it in before the pandemic was it’s just kind of what people want to do,” she said. “We know that fits a lot of people’s lifestyles now. They want the convenience.”
Company sales for curbside service was around $436,000 from April through October last year, according to past Springfield Business Journal reporting. Farbin-Kawamoto said the service has averaged around $42,000 at the two stores combined for the past six months.
“It’s still very steady,” she said.
The FIA report, which surveyed over 50 companies representing nearly 40% of the food retailing industry, said a majority of respondents expect to see sales decline in 2021. The primary cause was attributed to consumer spending and food consumption habits returning more to a pre-pandemic environment, which includes more eating out. Roughly 63% of survey respondents expect year-over-year sales to decrease this year, while 23% anticipate an increase. Around 13% foresee flat sales, according to the report.
Hy-Vee plans to grow its footprint this year, Gayman said, pointing to a March interview that Randy Edeker, the company’s board chairperson, CEO and president, did with Progressive Grocer magazine. He said in the magazine 40 new stores are in the pipeline with plans to add another 11,000 employees.
One of those stores scheduled to open later this year is a $12.7 million, 85,000-square-foot building under construction on East Sunshine Street, according to past reporting.
Farbin-Kawamoto said MaMa Jean’s year-over-year sales were up around 20% in 2020. It was an unusual sales year due to pandemic-related occasional panic buying, she said, noting the company is estimating a 3% dip for 2021. Still, she acknowledged the ongoing pandemic makes forecasting sales in her industry a difficult proposition.
“It’s really hard to track it because last year so many months were just off the charts in sales. … We could not get in product fast enough,” she said.
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