HomeEconomySupermarkets Are Stockpiling Inventory as Food Costs Rise
Supermarkets Are Stockpiling Inventory as Food Costs Rise
July 7, 2021
Grocers are setting aside larger amounts of frozen meat, sugar and other items to protect profits ahead of anticipated price increases.
Supermarkets are stocking up on everything from sugar to frozen meat before they get more pricey, girding for what some executives anticipate will be some of the highest price increases in recent memory.
Some supermarkets said they are buying and storing supplies to keep their shelves full amid stronger demand. Grocery sales in the U.S. for the week ended June 19 rose about 15% from two years earlier and increased 0.5% from a year earlier, according to Jefferies and NielsenIQ data.
Stockpiling by food retailers is driving shortages of some staples, grocery industry executives said, and is challenging a U.S. food supply chain already squeezed by transportation costs, labor pressure and ingredient constraints.
The move is a reversal from last year when consumers hoarded groceries because of concerns about food availability, disrupting the food industry. Now, retailers themselves are stockpiling to keep costs down and protect margins.
“We’re buying a lot of everything. Our inventories are up significantly over the same period last year,” said David Smith, chief executive officer of Associated Wholesale Grocers Inc. The nation’s largest wholesaler for more than 3,000 grocery stores recently purchased 15% to 20% more inventory, mainly of packaged foods with longer shelf life, he said.