Last updated on June 8th, 2024 at 09:18 pm
Ohio’s grocers have grappled with several significant challenges in recent months, according to Kristin Mullins, president and CEO of the Ohio Grocers Association.
Describing the complexity of the market as “a mixed bag of issues and successes,” Mullins noted that factors such as inflation, labor challenges and escalating competition – combined with the rising cost of dining out – have impacted shopper behavior in a good news/bad news scenario for area grocers.
“The grocery industry here in Ohio can’t be summarized as either prosperous or challenging – because it’s both. Most retailers are still enjoying steady, if not slightly higher customer counts,” Mullins said. “Is this good? I would say ‘yes.’ But if you were to ask me if the average cart is more profitable – the answer is ‘probably not.’”
Mullins said consumers may be eating at home more, but the increased cost of groceries is causing them to be more thoughtful about what they put in their carts.
“They still may be purchasing meat. But maybe instead of buying ribeye steak, they are buying less expensive cuts such as flank steak or ground beef,” she said.
Consumers are also under the misnomer, Mullins added, that the escalating cost of food is somehow tied to more money going to the retailer’s bottom line.
“This simply isn’t true. To stay competitive, most retailers are pricing products at or below cost to keep traffic and volume up,” she said. “Ohio’s retailers are still working on a 1.5-2.5-percent profit margin – the same as it’s been for the last several years.”
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Competition has many faces
Retailers are facing increased competition, and this is especially true in the Ohio market. “Since the COVID lockdown, people are happy just to be able to be out and about, which means they are spending money again. But what that looks like is a bit different than before the pandemic. With the surge in Door Dash, UberEats and other delivery services, people are eating out while staying home,” Mullins said.
“Ohio grocers are responding by making eating out from the grocery store just as convenient by upping their offerings – everything from prepared meals to curbside pickup to delivery,” she said.
Other challenges grocers in Ohio are up against include the flood of deep discount stores such as Dollar General and Family Dollar expanding their grocery assortments.
“These disrupters not only take away [mostly] our center store sales, but also our foot traffic,” Mullins said.
While competition has intensified in parts of Ohio, many remote rural and urban areas continue to be the victim of food deserts.
“Retailers in these areas are struggling to maintain good economics to stay open, which means consumers are forced to either drive a long distance to get their food or they use their local convenience stores and dollar stores to feed their family – often without the availability of fresh produce, meat or dairy,” Mullins said.
The demographic shift the state is reflected in the number of ethnic grocery stores that have opened recently. “We do see an increase in the number of different stores for different customers popping up in different regions of the state,” she said. “Ohio retailers look to strike a balance between offering food for everyone and meeting the needs of that core customer – be it from an ethnicity standpoint or a socio-economic one.”
Labor challenges continue
Labor shortages continue to be a challenge for Ohio retailers. According to Mullins, not only are grocers having issues finding good people, they are challenged with paying them enough to instill loyalty.
“Most retailers are already paying above minimum wage. But with the threat of $15 an hour on the horizon, this industry will struggle to absorb the impact that will have,” she said. “If it should happen, my guess is we will see even more stores close, more self-checkouts and more specialty departments [bakery] closing early.”
Independent grocers in Ohio are working hard to remain competitive and attract customers. This often translates into offering a more convenient shopping experience, Mullins noted.
“Everything from scan and go, self-checkouts, curbside pickup, to delivery and services such as Instacart – retailers are finding ways to get groceries to their consumers. Our grocers continue to do a great job catering to their specific customer base.”
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