"Bricks and mortar will be funding ecommerce growth, it will be the heart of how people shop for a long time" - Sobeys CEO
The head of one of Canada’s biggest grocery chains says the company in the Canadian food supply chain is ready today for a second wave of the COVID-19 pandemic.
“We haven’t loosened our protocols. They’re as strong now as they ever were. We’re ready,” said Michael Medline, President & CEO of the Empire Company and Sobeys Inc., who recently spoke at the Empire Club of Canada event titled Managing through Crisis and Building a Winning Culture.
“Our real worry now to quote Game of Thrones is that winter is coming. Winter is coming. It could be very bad. We have to keep people safe and we have to be able to allow them to come in and get the food.
“If companies don’t innovate they will die.”
SOBEYS INNOVATING IN THE FACE OF CANADIAN WINTERS AND COVID-19
“We are looking at innovations in our stores. It’s going to be cold. We don’t want people lining up outside but we want it safe. We’re going to do some structural changes to our vestibules to allow that. We’re going to put in structures so people are protected from the elements where they need to be. We are now about to pilot some innovative technology for queuing that if it’s cold out or it’s snowing out or it’s sleeting out, we’ll let you know. You can sit in your car, stay warm, stay out of the elements and we’ll let you know when you can come in. At certain locations we’re going to be able to do that. So we’re always innovating and getting ready and we’re also ready in terms of supply chain.”
Medline said the initial stages of the pandemic back in March was a “blur”.
“We were moving as quickly as we could and the only way to get through this was to get back to basics . . . a few key priorities. We distilled down to three priorities – keep the stores open and keep those shelves stocked, keep our teammates and customers safe, and give back to the communities in terms of philanthropy,” said Medline. “That’s what we did during that period of time and we stayed true to our values throughout that time. And that’s how you have to act.
“Our team, including me, we worked around the clock from wherever we were. And the team did a great job. We just had such a duty. We don’t necessarily think of ourselves as essential services. For a number of months there we were an essential service. We had to keep people safe and we had to keep them fed. And we didn’t know where this was going. It was a very, very scary time and indeed unprecedented.”
COVID-19 HAS PROVEN THE STRENGTH OF CANADIAN FOOD SUPPLY CHAIN
Medline said the pandemic experience, especially in its early stages, proved that the Canadian food supply chain is strong.
“I’m not going to sugar coat it. I like to be transparent. It was hanging by a thread back in March and April. We were being asked to run our stores, run our supply chains at a level we didn’t actually think was possible. Our great supplier partners throughout the country were doing things they never thought were possible and the people who supply had to do that too,” he said. “It was hanging by a thread. We made it through because we worked together, because we innovated, and we partnered across the country. Everyone was helping each other. We were in constant communication with our supplier partners.”
Medline was quite blunt referring to reports that competitors have been or want to impose fees on suppliers.
“This is the worst relationship I’ve ever seen in my couple of decades in retail. Some of the practices that have been in the news right now are for me hard to believe and repugnant actually,” he said. “And taken to the extreme, some of these behaviours are just plain bad for Canada and that’s our view at Empire. They’re bad for the consumer goods companies and for clear reasons they feel bullied, it doesn’t seem fair. That in turn hurts our farmers that we have to take care of.
“It’s not good for small mom and pop food retailers. How can they compete with that? It’s terrible for consumers when things like this happen because the fear is it’s going to raise prices for consumers which we’ve been resisting with all our might. It’s even unfair, don’t cry for us, but it’s even unfair to large grocers like us who try to play by the rules, who try to play fairly, and want a good food supply chain.”
WHILE ECOMMERCE GROWS, IT REMAINS A SMALL % OF GROCERY SALES
Medline said people will continue in the future to visit brick and mortar stores. While ecommerce has grown, and more so through the pandemic, it still remains overall a small percentage of sales for grocery stores.
“The foreseeable future most grocery will be in bricks and mortar. Ecommerce will be sexy. It will be the highest growth but bricks and mortar will be what funds all this ecommerce growth and it will be the heart of how people shop for a long time,” said Medline.
“Ecommerce will continue to accelerate far faster than any other part of the business.”
Medline said he believes that if companies don’t innovate they will die.
“I’m a huge fan of innovation. We have all sorts of plans I’m not going to make public today. To be honest though, looking back five years ago, I’m disappointed in how little and surprised at how little progress retail has made in terms of innovation over a five-year period where I thought, and many thought, it would explode,” he said.
