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Clarkston Supply Chain Expert Shares Insights with California Grocers Association

April 2, 2024  | Clarkston’s Stacey Erickson, grocery retail, consumer, and supply chain expert, shared insights with California Grocers Association in their latest edition of the California Grocer magazine. Read a few quotes from her below, and the full magazine here

State of the Industry: Exploring Mergers, Acquisitions, and the Future of Grocery

Speaking to consumer value and basket share …

“Grocery product prices have increased due to inflation, pushing customers to opt to save money and spend less on unnecessary products. The pricing deflation prospect moving into 2024 could place pressure on operator margins during a time when labor costs are already high.”

Speaking to the future of technology and digital innovation … 

“There’s increasing competition with big brands such as Walmart, Costco, Aldi, and Amazon. Subscription services with added convenience, such as Walmart+, will continue to be big game-changers for customers looking for an “easy” way to get their groceries. Industry unit volumes are down 3%, but major players like Walmart are up 1% individually.”

Speaking to the impact on suppliers and C&S Wholesale Grocers …

“C&S is a leading retailer and wholesaler that creates a shopping experience more direct to the customer. This deal will create a mega-competitor that might cause an uptick in other M&A deals and also have an impact on business real estate. The consolidation could spur other brands to follow suit to combat falling revenue in the grocery space, putting more pressure on regional players.”

Speaking to California labor dynamics …

“California is experiencing very low job growth-its workforce decreased after the pandemic, and few jobs are being created, establishing a stale job market.”

“There’s a larger industry push for higher wages, which is consequently pushing companies to find ways to decrease other operational costs and boost productivity. The rise of Al technology and automation in the supply chain could lead to companies cutting down on personnel costs.”

Speaking to Kellogg’s split of operations into WK Kellogg Co. for cereals and Kellanova for snacks … 

“This split leaves more room for product innovation and focused branding. Each half of the company will be able to focus on developing new and better products within their respective spheres, which might increase consumer access and sales of their products.” Officially executed in October 2023, the split triggered notable reactions in the stock market, establishing a pulse for how these unique strategies may influence the larger economy.

“Stock investments for both companies saw a slight slump at the beginning when the split officially happened in October 2023. These initial slumps reflect the uncertainties surrounding such strategic decisions, as investors adjust to the new corporate structure and anticipate the long-term implications for both entities.”

 Read the Full Magazine Here