Business

A ‘rapid shift to a new way’ for supermarket business

The CEO of Foodstuffs tells Rod Oram he is certain food manufacturers and supermarkets can produce and distribute enough food for Kiwis, although the company is preparing for further challenges ahead

Can New Zealand’s food manufacturers and supermarkets keep feeding the nation through the escalating Covid-19 crisis?

“The answer is 100 percent ‘yes’,” says Chris Quin, chief executive of Foodstuffs North Island, the co-op of independent store owners in the New World, Pak’nSave and Four Square chains.

Over the past four weeks, the co-op and sector have coped with demand often running two to three times normal levels. There have been some shortages along the way but consumers’ focus on a narrow range of foods, such as less perishable foods, have helped the business ramp up the volumes, Quin adds.

This period of “demand overload” should settle down into a steadier pattern over coming days as shoppers adjust to new ways of shopping designed to reduce community transmission of the virus.

More predictable and somewhat lower demand will help the sector’s supply chains develop resilience for the long haul. Quin is confident that manufacturers, importers and distributors will keep supplying the food, drink and household items stores sell.

Nonetheless, Foodstuffs is preparing for potential challenges ahead. For example, every store in its system is working on plans for narrowing its range of goods if some of its staff take ill with the Covid-19 virus and its workforce is reduced.

Over these past few hectic weeks of exceptionally high demand and disruption, Foodstuffs added the staff, transport and other resources it needed to cope without any thought about the extra costs, Quin says.

In stark contrast, though, its Gilmour’s subsidiary which serves North Island wholesale customers such as cafes and restaurants has suffered “a two-thirds drop in sales in each of the last four days,” Quin says. Trents, the South Island equivalent run by Foodstuffs South Island, its sister co-op, has been hit just as hard, he adds.

It will be another week or so before the co-op has a clear picture of the impact of these dramatic changes in the business. Whatever the answer, though, the co-op will stick with its promise to keep prices as normal as it possibly can, he reiterated.

While “demand overload” was peaking as the first phase of the crisis, Foodstuffs was already working on the second phase – developing systems for supplying and trading under Alert Level 3 and 4.

Quin gives the Government high marks for its accessibility and responsiveness, and for articulating the principles under which the food sector had to operate then letting it get on with figuring out how to do so.

Being a co-op was an added advantage, he says. Foodstuffs delivered principles and practices plus some strict instructions and the reasoning behind all of them then let each independently-owned store innovate within those. “We stand back and let them lead in a local context with the very best execution for their store, their community and their team. When they do that, then they're awesome.”

Working on the future is the third of the three phases Food Stuffs envisages. While almost all the co-op’s efforts have gone into the first and second phases, it has already begun to evaluate how consumer behaviour might change and how it can best respond.

The country’s strong, collaborative and effective response to the Covid-19 crisis is typical, Quin says. Thanks to earthquakes and other dramatic events, “we've developed a very good crisis management approach. The way people collaborate, take accountability and innovate is spectacular.”

However, “you pretty quickly realise this is not managing a crisis. This is a rapid shift to a new way.”

Quin says he began by asking his four-person strategy team: “Give me a framework. Give me a way to think about this.”

From that came two principles: First, is “the safety and well-being of staff and customers.” Second, “giving assurance to New Zealanders of having groceries available is absolutely critical.”

“Our fundamental underlying framework was to reset our strategy as a business for 2020. Yes, [the crisis] has phases and we will shift resources between the phases. But we will remain an operational business.”

Having risen to the great challenges of recent weeks, “our people now need to breathe a little slower and act with meaning and try to anticipate issues.”

"For a while now, I’ve thought about leadership as based on connection, clarity and action. The basics don't change in this situation. All of us are being asked to be the best leader we've ever been right now.

“So being stronger and calmer really helps, even when you're faking the hell out of it.”

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