Two interviews using the same set of questions were conducted with two Store Directors in Michigan to get their perspectives on how Meijer manages its stores and operations to cope with the COVID19 pandemic, touching on issues such as improving utilization, warehousing, and demand forecasts.
Part 1
Q1: “At the beginning of the pandemic, there was extreme increases in demand for certain goods, such as toilet paper, canned goods, etc., while it was pretty clear what was causing that increase in demand, it wasn’t clear what was going on behind the scenes to ensure that these products were getting back on the shelves. What role did you and Meijer play in accommodating this demand?”
Response: “So yeah, I would say that obviously being in stock is important. I think the role that we played really, when you think about it, was being kind of a trusted retailer, especially in Mid-Michigan where we serve. I would say that our role was to make sure people were calm. Really [it] was to provide [assurance] so people felt comfortable with [what they were seeing in the stores]. I don’t know how much time you spend in Meijer stores but really for us it was extremely important that we maintained reasonable shelf conditions and so the panic didn’t set in. It was a point of emphasis for us to ensure that our shelves were filled, even if, for instance, toilet paper. [It was important that] we didn’t have 15, we had 150, so people didn’t feel like they had to buy 15 of them. Really just providing calm in the community.”
Q2: “How have you had to adjust inventory utilization/limitations to meet with the supply shocks that have been occurring throughout the pandemic?”
Response: “We absolutely had to, you know realistically speaking product limits can be handled two ways, rigidly or they can be handled with the honor system, and for the most part that’s what we liked was the honor system. Most of the customer base respected it. It helped us supply everybody, and because of it we didn’t see shortages like some other stores did.”
Q3: “How is Meijer mitigating the anticipated shortages during the holiday season?”
Response: “We’re doing the best we can as a company, you guys have seen the news and understand that there is a lot of stuff sitting all over the world waiting to come in. Unfortunately, a lot of those goods aren’t going to make it in. There’s a shortage of labor at the docks and on the ships, people to drive the products, people in warehouses, etc. Every piece of the supply chain right now is fractured right now, some it’s Covid and some of it is other things, but the reality is the chain in strained. We’ve had 18-20 months of increased demand in every single category you could imagine. And the way the country is set up, we were set up for 60% restaurant consumption and 40% cook-at-home. And if you are eating out, most people are eating with delivery services, DoorDash or whatever. This large change in demand decreased some demand for goods meant for in-home consumption. When restaurants reopened, things shifted again. Now things are starting to reach some normalcy. To mitigate this, we’ve tried to secure as much goods as we could ahead of time. So what we’ve done is ordered holiday goods way in advance to make sure we had it before it was too late. A lot of the stores are doing the same. This is good to help explain the shortages, if you think about your own personal life, how many times a week were you cooking vs. eating out. Then think about the Covid changes, and how that fluctuation helped wreck the supply chain.”
Q4: “What is Meijer’s outlook on the port delay situation currently happening?”
Response: “They’re dramatic, 4-12 weeks, sometimes longer, and that’s just the seasonal/important stuff. There’s other things we aren’t even thinking about right now… things we’d normally have large supplies of are kind of not important to the holiday season so we aren’t worrying about that right now. Meijer just had to pay up on the shipment costs. Same with consumer pricing, ultimately the customer is the one paying for it. We’ve tried to carry the same assortment of goods we always would, even if it is a low demand. A lot of these costs are of course getting things to the store. Gotta pay up.”
Q5: “Where is the biggest opportunity for growth within your store warehouse management?”
Response: “People, human capital is the biggest opportunity. That’s what we keep fighting and that’s why you see all these high-paying wages. Eventually the dam will break and people will want a job, but right now it’s pretty difficult. It’s not only acquiring talent, but keeping the people we have here.”
Q6: “With a general shift towards e-commerce and micro fulfillment, how was Meijer positioned itself to be prepared for this change?”
Response: “Really, the future of Meijer is all about e-commerce and the out of store experience. The idea behind that concept is: how do we take the top 200-500 products and put them in a micro fulfillment center, so that we can streamline the operations that you’re seeing in the stores. That makes it easier to increase the amount of e-commerce orders we can fulfill in one day. It’s still being developed and we’re still trying to figure out the best way to utilize this for Meijer, but it’s definitely the future.”
Part 2
Q1: “At the beginning of the pandemic, there was extreme increases in demand for certain goods, such as toilet paper, canned goods, etc., while it was pretty clear what was causing that increase in demand, it wasn’t clear what was going on behind the scenes to ensure that these products were getting back on the shelves. What role did you and Meijer play in accommodating this demand?”
Response: “I’ll start with the buying team. I think they worked very hard in securing additional products as the demand was on the rise. But also for the logistics team getting that stuff here as soon as possible. I know for us typically we don’t unload our trucks daily until about 11 am. But our team, from the 3rd shift team, as soon as that truck hit the dock, whether that be 6 am or 7 am in the morning, those trucks were opened up and products were pulled and we were working a new load at the moment. So all that product was being worked probably the night before. So the night team kinda ran whatever they could left over but our game plan was to get to the shelf so we can take care of our customers and obviously get the sales as well that’s important in driving this business.”
Q2: “When it comes to labor, did you guys have to offer any incentives to workers to get them back in those back rooms to help unload and load the shelves. Did you have any issues with that? I know labor shortage is a problem right now but maybe back then was it something you were able to manage?”
Response: “When the pandemic was first in the early days, I don’t think it was a problem getting team members on board to work. The teams we have in place, they kind of worked to our advantage. Because we run a morning IC team so instead of working backstock these team members would pull the product and work live load (new stock) at the moment so i think that played a critical part in how we set up and how we operate. But as the pandemic carried on, clearly we had people on leave that maybe didn’t feel comfortable working in this environment they wanted to take a leave, and Meijer was very open to ‘hey if you don’t feel comfortable we’re willing to give you that leave to do whatever you have to do.’ So we did come back and offer the $2 appreciation bonus per hour. So for any team member that worked, whatever their standard pay would be they’d get an additional $2 an hour and that would also account for overtime.”
Q3: “Many are predicting that there will be difficulty ensuring the availability of holiday items this year due to import constraints. So as Meijer approaches its peak, what do you foresee happening this holiday season?”
Response: “Right now from where I sit, I think we’re in a great position. Do I see some categories like toy products that are in demand that maybe we don’t have what we would have in the past? Yeah but starting out these holidays, I think we are in a good position in all categories. Now there are some areas like seasonal goods, when you think about Christmas bags and different things like that. Trying to think of anything else, again, toys that are very limited in some categories. But i can tell you our buying team has worked together, brainstormed, how we could better get product. I think a couple of the guys I talked to in the buying office, we’re flying some of this stuff in now. We would’ve done that prior. So we’re air lifting this product in instead of going through the docks we’re trying to look at a work around to get that product in here as well.”
Q4: “Would that be the same for Thanksgiving? a lot of people are staying home and doing it separately from their families so there’s probably a higher demand for turkeys for thanksgiving. Did you see the same thing with that or did you have to buy more in bulk this year or is it kind of still free flowing like it was before the pandemic?”
Response: “I think there for a minute with the pricing we were running, we were running 33 cents a pound Meijer turkey which we out-paced and outsold that forecast but we still have product in the butter balls and true goodness. And we got turkey today, frozen turkeys. Now I will tell you about the end of the week last week, very limited on frozen turkey. People were asking ‘what do you mean you’re out?’ We had fresh turkey but frozen turkeys were a challenge based on some of the pricing we were running. You know from a food standpoint, the only thing that’s made us rethink how we’re doing things is that getting the trucks here earlier. For us, for produce, this produce department here is the number one produce department in mid michigan so we do more sales out of produce than 36 other stores. The pure volume of that has been a problem because our orders at the warehouse had been later due to labor constraints. Not having the bodies to get those products selected in a timely matter and get it out to the stores. Meijer has done a great job it’s just coming in a little later one of the things we’ve done at the store level is changed our strategy order more the day before so that we have some to set the store and be able to operate and still maintain those conditions of having the products that customers needs so i think that’s been a big help. You gotta change how you do it at some point and that’s what we’ve done as a store.”
Q5: “One of the newest things the supply chain is being challenged by right now is through the movement to ecommerce and what comes with it. There’s a lot more of a need for reverse logistics and returning items – what processes do you have in place for reverse logistics?”
Response: “So if we’re returning, and we don’t return it to the shipment we would do what we would call a “re-slot” directly back to the warehouse. Now if it’s anything that’s coming back from a customer from online shopping, we send it through what we call ‘mark-right’ which is a return salvage program that goes over the warehouse as well and they determine where that product goes from there. Do we take a complete loss? Do we sell it to another company? Does it go back to that distributor? They make those decisions. Our biggest thing is processing right outside the store so that we get the proper credit for it and it’s not causing stock loss in the building. When we get to doing inventories every nine months and every other department has an image for every nine months then you kind of get an idea of: OK what did I do? What did we miss?”
Q6: “With a general shift towards e-commerce and micro fulfillment, how was Meijer positioned itself to be prepared for this change?”
Response: “I would tell you from what I know, I think it’s an added benefit. I think:
- It helps the micro fulfillment in the back so you’re not taking from the sales floor. It’s kind of keeping more product for the floor. We have a team going out shopping for customers and if there are large orders so now we caution ourselves. If there is a bad shopping experience the customer can come in and find what they want.
- I think it’s going to be an added benefit once they get it going throughout the company. I think you’re gonna see us do that in more stores, something we’re getting ready to try here and one of the stores in Taylor, MI. The Taylor location has a pretty big backroom so they set up a mini-store in the backroom like the aisles in the grocery. They ended up taking their top 900 items that go through pick up both in grocery and retail and they set him up just like an aisle in the backroom. So now the team on 3rd shift just stocks that stuff to those shelves, so the team doing the pick up or curbside go back and just pick off those displays back there. Because of this, their pick rates have gone up as well as store stock levels. It’s definitely a win-win scenario.”
