CHICAGO — Convenience stores have long since cemented their place as America’s corner market and fueling depot. It was no surprise when convenience stores were dubbed essential businesses in the wake of the COVID-19 pandemic. The store clerks and managers who kept America going for the past year-and-a-half are heroes in their own right. And they were not alone.
They were supported by other essential employees, significantly, the truck drivers who went without seeing their families so they could bring food to every corner business of the country. And their work was made possible by warehouse employees who masked up and risked their lives to pick and pack cleaning supplies and hand sanitizer, food and beverages, medicines and more. They are all important parts of a supply chain of essential workers keeping the veins of the country pumping. It wasn’t easy, either. Product scarcities, driver shortages and more led to empty shelves and even some desperate situations. These are the stories of what it took to deliver the goods that fueled America, and what it will take to keep the country stocked moving forward.
Lessons in Labor
The basics of the distribution business are easy to understand. Orders are placed. The orders go to a warehouse overseen by a distributor. The distributor picks the order, ships and delivers it. “But there’s so much more to this business than just that,” says Joe Roenna, executive vice president of sales, operations and marketing for Eby-Brown Co., Naperville, Ill. And making it work through a worldwide pandemic intensified that complexity.
Roenna compares Eby-Brown’s communication protocols in the early days of the pandemic to a crisis-management mode, in which the leadership team was in contact with every plant, every day, multiple times a day. “Two months in, we all realized we were going to be in this boat for a long time,” says Roenna. It was then that the team at Eby-Brown switched from crisis mode to doing what it could to adjust to the “new normal” of working during the COVID-19 era, which continues today.
“Truth be told, we’re still short [employees] across the board. … It’s just been a real challenge like everyone else has faced.”
One of the biggest challenges was deciding when and how to bring Eby-Brown staff back into c-stores. In the early stages, Roenna says, Eby-Brown did not experience labor issues due to the overall decrease in demand. “Our queue went down, our picks went down, and we were able to staff. We had more than enough staff to handle that,” he says.
But Eby-Brown ran into labor issues as winter approached, “which is when we knew things were going to get scary,” says Roenna. He says Eby-Brown was short on warehouse labor the second week of February. “That’s unprecedented,” says Roenna. “That never happened. It’s usually the reverse: You’ve got plenty of people, and then you start to get short coming into summer. At that point, we realized something had changed in the economy.”
View From Here
“Challenging” is how Kimbery Bolin, president and CEO of the Convenience Distribution Association (CDA), Reston, Va., subtly describes the state of the c-store distribution industry in the time of the pandemic. The CDA works on behalf of distributors of products for c-stores and other small-format retailers that represent more than $102 billion in U.S. sales.
“Labor shortages in the warehouse and on the road are the biggest challenge right now, and those same labor shortages are affecting the entire supply chain. Many manufacturers are having difficulty fulfilling orders,” she says.
Some of the efforts distributors made to address the labor shortage include raising wages, offering sign-on bonuses and creating flexible work schedules, but she says they are still falling short.
Driver shortages are nothing new, says Roenna, but they were exacerbated by the pandemic. “The driver shortage went from something that was manageable to basically feeling like it was unwinnable this fall or this winter, where we saw zero [job applicants] walking in the door.”
“The driver shortage went from something that was manageable to basically feeling like it was unwinnable this fall or this winter, where we saw zero [job applicants] walking in the door.”
Eby-Brown “aggressively combatted” the shortage of warehouse workers and drivers as best it could, says Roenna, “but truth be told, we’re still short across the board. We’re probably, on the driver’s side, 20% below where we’d like to be. We’re probably 10% or 15% below where we’d like to be on the warehouse side. It’s just been a real challenge like everyone else has faced.”
Like many, Eby-Brown increased wages as the “first line of defense” against the shortage of workers. But that additional pay has to come from somewhere, Roenna says, either through cost savings or price increases, both of which create their own problems.
George Abdoo, vice president of sales for S. Abraham & Sons Inc. (SAS), Grand Rapids, Mich., points out the complexity of distribution.
“Delivering our product is not an easy job. It’s not like pulling up to a loading dock and having someone with a forklift unload. It’s a very physical job. And when you have a national shortage of drivers, they can be a little more selective in the jobs they take, which makes it more difficult to find and hire quality drivers,” he says. “We have increased wages to attract more people to work, but it’s to the point that it’s very difficult to sustain at these levels.”
And what are some solutions to distributor’s labor problems? “Nothing is too farfetched to consider,” says Abdoo. “As the labor shortage continues, possibly partnering with other vendors to cross-dock product, or pick up their lines in order to reduce expenses for everyone. These are just a couple of things that need to be reviewed and considered.”
McLane Co., based in Temple, Texas, met the preexisting challenge through its first-ever National Hiring Day in July, attracting more than 1,400 candidates and extending job offers to about 760 candidates.
More recently, in August, McLane became a corporate member of the National Hispanic Corporate Council (NHCC), a resource to help corporate America maximize the Hispanic market opportunity.
Souring Supply Chain
Productwise, the first few months of the pandemic proved particularly challenging for foodservice distribution. Sanitation concerns forced many retailers to shut down foodservice offers, and some suppliers struggled with COVID outbreaks in their facilities.
Meanwhile, changes to consumer needs proved problematic, especially for personal protective equipment (PPE). “It was impossible to get sanitizer and things like that,” says Roenna.
Issues with the global supply chain, aluminum-can shortages and, yes, the run on toilet paper further exacerbated the issues.
“The struggle within supply chain from our manufacturers continues to grow,” says Marie Wise, SAS’ vice president of marketing. “While our industry is experiencing record sales, the demand outpaces supply. Many of the supply issues stem from labor shortages as well.”
As a result, distributors cannot get all the product they are ordering, says Abdoo. “It makes it very difficult when your customers depend on you to bring product to their stores, and we simply don’t have it due to manufacturing issues caused by the pandemic. It’s a very frustrating position to be in.”
And distributors are quick to point out key differences that complicate c-store distribution beyond other channels of retail.
“The shopper is typically in an instant consumption need, and a store that does not carry a wide variety of items can often leave the consumer empty handed if the shelf is bare,” says Wise. “Unlike other sectors in consumer goods, distributors and c-stores alike have a difficult time pivoting to other products and pack types the same way grocery or mass can do.”
Abdoo says the pandemic has taught him to “always watch trends and be as proactive as possible. If you know that a vendor is going to have supply issues, work to find a comparable item to bring in,” he says. “Obviously, you can’t replace a Snickers or Reese’s, but you can find alternate items for many of the products we carry, typically from smaller, maybe more local vendors that may not have the supply issues that many of the larger companies are experiencing.”
Adds Wise, “Getting ahead of the masses is key to keeping a steady supply as many transition quickly when supply dries up from a source. It has become a first-come, first-serve industry in many ways.”
Essential Support
Eby-Brown shut down its Expo East conference in Cleveland in March 2020 halfway through the event, and most everyone working on the production side of parent company Performance Food Group (PFG) has been working from home since then. Life at Eby-Brown is “just now, sort of getting back to normal,” says Roenna.
“The biggest challenge was just the regulation side and understanding what was allowed where,” he says. C-stores in some states were not allowed to sell food at all. Many stores stopped offering pour-your-own coffee service or self-serve drinks altogether, not to mention traditional self-serve c-store items including roller-grill hot dogs and other products, says Roenna.
But regulations were not the only barriers to foodservice. “Even though something was allowed, or there wasn’t any formal guidance from a state or a municipality. A lot of our customers were not comfortable with their ability to execute in that arena, even if it was allowed with changes that they needed to make. They weren’t sure it was safe for their own people,” Roenna says.
This reality created an array of challenges for distributors who not only had to cope with regulations that varied state by state but also with execution strategies that varied brand by brand and chain by chain.
Like convenience retailers, wholesale distributors were deemed essential early in the pandemic, “and they really didn’t miss a beat even though they had to overcome innumerable challenges almost overnight,” says Bolin of CDA. “From supply-chain disruptions to business shutdowns to major changes in protocol geared to keep COVID-19 at bay, distributors remained on the front lines, pivoting and adapting as necessary to weather the unprecedented times.
“If the last year has proven anything, it is that wholesale distributors are hard-working, resilient, dedicated and committed to their trading partners,” says Bolin.
“Despite out-of-stocks, supply-chain issues and increased operational costs, many [distributors] realized increased sales,” says Bolin of CDA. Specifically, items such as cigarettes, other tobacco, candy and snacks saw some growth, and some were able to expand their grocery sections.
Also, some grew and expanded territories, improved operational efficiency, added new product categories or upgraded technology. And those distributors’ outlook at the beginning of the year was fairly optimistic, Bolin says, with more than half of CDA’s members planning to expand their foodservice offerings. “The pandemic was tough on foodservice, but new initiatives, technology and consumer demand offer opportunities. Distributors also planned to sharply focus on category management to drive profitability. Many are adding new technology to increase efficiency and manage inventory,” she says.
History Repeats
Many of the challenges imposed by the COVID-19 pandemic were not entirely new for McLane Co. with a 126-year history under its belt, says Everett Boutwell, chief operating officer of McLane’s grocery division, based in Temple, Texas. The company survived the Spanish flu pandemic of 1918, and it intends to thrive in the post-COVID-19 world.
C-stores were already looking to make decisions faster than other retail sectors long before the pandemic, partly because of how quickly customers enter and exit c-stores and how many c-store products are consumed immediately upon purchase. “As such, store layouts, plan-o-grams, item offerings and overall ‘shopability’ must take this shorter shopping window into account,” says Boutwell.
To assist with the tight decision-making window inherent to c-store distribution, McLane released the McLane Edge digital platform in early 2021. The platform provides retailers with marketing and merchandising insights, sales-building programs, services, promotions, category trends and early looks at new products, according to Boutwell. McLane Edge combines the distributor’s Strategic Merchandising Portal and Strategic Merchandising Solutions Magazine into one entity, he says. Retailers using McLane Edge can also use it to order special offers and featured items from the McLane Edge website.
“One of the lessons we learned is that flexibility is vital, especially during uncertain times,” says Boutwell. That flexibility has been important both during the height of the pandemic in 2020 and now. “As states, counties and municipalities have reopened, we have observed an uptick in volume,” Boutwell says. “Demand has also increased since COVID-19 vaccinations became widely available.”
Innovation Rules
In a similar vein, Wise of SAS says the challenges exposed by the pandemic have allowed the company to focus on areas where it can give better support to its retail partners. For example, it has forged new relationships with Scottsdale, Ariz.-based Blue Yonder, which provides SAS with a retail plan-o-gram platform, and with Chicago-based 1worldsync, which offers a way to streamline new-item setup and maintenance. These solutions “will allow our customers more access to information and digital assets, making back-office management more efficient,” she says.
In the next five years, SAS plans to continue to pursue growth in foodservice, says Abdoo. “That is a big growth opportunity in the convenience-store channel, and we intend to be industry leaders in that arena.”
One way Eby-Brown is cutting costs is by increasing efficiency, both through process improvement and investing in technology, especially automation.
“One of the lessons we learned is that flexibility is vital, especially during uncertain times.”
Roenna says improving technology and adding automation in warehouses is a multistep process for Eby-Brown. Many of the company’s warehouses were designed 15 or 20 years ago, along with the technology inside. He says some of the basic investments in new warehouse technology include more modern conveyers, more modern sorting devices and different automation systems that can allow product to flow through more freely and require fewer human hands.
Voice computing is another area where Eby-Brown is expanding into new technology. The vision is that c-store customers can say a command as simple as, “Hey Eby, where’s my truck?” or “Hey Eby, add three boxes of Snickers to my order, please.”
Like everyone else, Roenna says, Eby-Brown is working to adjust to whatever the new normal is as the United States moves away from the COVID-19 pandemic. “But our ultimate goal is to continue to sell more food,” he says. “We want to become the preeminent foodservice supplier for convenience stores.”
It’s a common refrain from distributors, and one that reflects a steadfast drive even in hindsight of the COVID-19 experience.
The pandemic affected foodservice sales the most, according to Bolin. The biggest challenges, she says, included prepared food programs that had been put on hold, products that were unavailable or in limited supply, and reduced sales, especially for coffee programs.
However, distributors did see an increase in frozen-food and grab-and-go sales and were able to eventually recoup lost sales.
“Distributors were creative in making the necessary adjustments to contend with COVID by ramping up employee retention efforts, increasing safety measures, adjusting deliveries, expanding offerings, focusing on service and taking costs and complexities out of the system as much as possible,” she says. “Despite out-of-stocks, supply-chain issues and increased operational costs, many realized increased sales.”