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Empty grocery store shelves return as sick employees, supply chain delays collide

A Target’s bread aisle shelves are nearly empty as the United States continues to experience supply chain disruptions in Washington, U.S., Jan.9, 2022.

Sarah Silbiger | Reuters

Empty shelves have returned to supermarkets as grocery store workers call in sick and food trucks arrive late.

This is one of the latest results of the labor-intensive omicron variant. Investors are seeing the pressure and bracing for a longer period of high costs for labor, transportation and food.

Shares of major grocers, including Albertsons, Kroger and Walmart, fell on Tuesday. Albertsons shares fell more than 7% at noon on Tuesday, after the company detailed supply chain challenges and inflated costs it sees in its earnings call. The drop in its inventory occurred even as the grocer raised its 2021 fiscal forecast. Kroger’s shares fell about 3%, while Walmart lost less than 1%.

Covid cases and hospitalizations have reached record highs in the United States, as the highly contagious variant spreads. The country reported about 1.5 million new cases on Monday, according to data compiled by Johns Hopkins University. Hospitalizations exceeded last winter’s peak, with 144,441 Americans hospitalized with the virus on Sunday, according to data tracked by the Department of Health and Human Services.

Workers feel the tension

Grocery store workers are also feeling the effects of omicron. Samantha Webster helps replenish coolers with butter, gallons of milk and more as a dairy manager at a Safeway store in the San Francisco Bay Area. Safeway is owned by Albertsons.

Since early December, she said more and more employees have had to take time off work due to contracting Covid or having close contact with someone who is sick. She said 15 employees are currently on staff for nearly 60 people at the store.

Fewer pallets are arriving from Safeway’s warehouses and there aren’t enough grocers to help unload them, she said.

In the dairy section, there are gaping holes where there was cream cheese and yoghurt. Fresh bagels and loaves of bread are missing in the bakery aisle. And in the fruit and vegetable department, the potatoes are running out.

In other aisles, she said there were signs of strain as well, such as a shelf full of cans of clam chowder soup because other varieties, like minestrone and pea soup, were not available. not arrived.

“The shelves are getting more and more bare,” she said. “One person cannot run an entire department. “

CEO says Covid is extending stockouts

Albertsons CEO Vivek Sankaran said on the call the grocer has had low stocks or items missing in some categories for several months. He said the latest spike in Covid cases was prolonging some of those stockouts.

“We expected the supply issues to resolve themselves further as we move into this period right now,” he said on the call. “Omicron has taken a bit of a toll on this. So there are more supply issues and we expect more supply issues over the next four to six weeks.”

The new variant of the coronavirus is exacerbating worker shortages across industries, from restaurants and retailers to airlines. Business leaders are forced to make tough decisions, such as reducing hours of service, canceling flights and closing stores. It has also started to show up in the sales figures. Lululemon is among retailers who have warned that fourth quarter profits and revenue will be lower than estimated as they feel the effects of reduced hours and limited staff.

For grocers, however, the challenge may be felt more as this is a low-margin business where companies often have less margin to raise employee wages, pay overtime, or pass higher costs onto. customers. Some buyers also have less money to spend. The child tax credit, which paid monthly payments to families, ended in December.

Albertsons executives said on Tuesday that the costs of ingredients, packaging, transportation and labor had increased. They said the grocer got through some of that inflation, but tried to keep prices level for essential items that customers buy frequently.

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