Purdue experts say COVID-19 will affect grocery prices, supply for months to come

Coronavirus

A shopper looks beef at a Kroger store in Atlanta underneath a sign limiting shoppers to three packages of ground beef on Tuesday, May 5, 2020. Kroger is limiting meat purchases, like a number of other grocery retailers, due to supply concerns amid the COVID-19 pandemic. (AP Photo/Jeff Amy)

WEST LAFAYETTE — Grocery shoppers should not expect to see prices drop to pre-pandemic levels for several months, according to supply chain management experts at Purdue University.

Purdue’s Krannert School of Management hosted a virtual panel discussion Monday that focused on the COVID-19 pandemic’s affect on the U.S. supply chain.

Associate Dean Ananth Iyer said while several supply chain disruptions have been observed since the start of the pandemic, there are generally 80 to 120 days worth of inventory in various stages of the U.S. supply chain. Most grocery stores usually have two to three weeks worth of food in their inventories at any given time.

“So the good news with this is there is a lot of inventory in the system,” Iyer said.

However, supply chain disruptions for several specific products are still affecting prices and selection at most stores, and retailers are still catching up with the initial “shock demand” prompted by the virus and various stay-at-home orders.

In particular, agricultural economist Jayson Lusk pointed to temporary closures of several meat processing plants and the affect those have had on meat prices and supplies.

“Rising prices are the signal that you and I should cut back and try something else,” Lusk said. “It signals that there’s scarcity at the moment.”

According to the Bureau of Labor Statistics, overall U.S. grocery prices rose 2.6% in April, which represents the biggest one-month increase since 1974.

Several Greenwood shoppers said they are still noticing smaller selection and higher prices on their grocery trips.

“Pork, the larger, nicer cuts are definitely harder to get,” claimed Christa Ricketts. “We smoke a lot of meats, and that was something we wanted to do, but it was definitely harder to find.”

“The milk I buy is the same price it was before,” noted Lauren Nelson. “But I think meats seem to be a little bit more expensive.”

Lusk recommended shoppers explore alternative options when looking for meat or other products at stores, something many shoppers are already doing.

“We are particular on certain brands, and toilet paper was one of them,” Ricketts said. “The kids were not happy with the switch up on the toilet paper.”

Lusk also said purchase limits in the meat aisle are another way for retailers to manage scarcity without raising prices even higher.

“By the way, that high price, that’s also the signal that those processors need to get back up and running,” Lusk said. “They’re leaving money on the table by not being able to run at full capacity. There’s the old saying that the cure for high prices is high prices.”

Iyer and associate professor of management Mohammad Rahman said most retailers are making necessary changes to adjust to the pandemic. However, companies will likely have to make changes to keep up with shopper demands beyond coronavirus.

Mohammad suggested clothing retailers will have to embrace more online shopping and provide services for those who aren’t comfortable shopping online yet. Iyer said grocery stores should continue expanding online order capability for shoppers who want to make fewer trips to the store.

“At least until there’s a vaccine, I think this has affected how I will shop,” Nelson said. “I won’t be going to the store for one thing that I need, I’ll probably wait until I really need to go.”

Iyer also predicted more automation in stores in the future, as well as more shopper interest in store cleanliness and the “chain of custody” for the foods they buy.

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