Grocers have spent approximately $24 billion on pandemic related expenses since March 2020, including safety, workforce and technology investments, according to a report from FMI that was written about in Chain Store Age. The report is called Receipts from the Pandemic: Grocery Store Investments Amid COVID-19 and the Resulting Economics of an Essential Industry. FMI calls it the first comprehensive overview of the changes made by grocery retailers and a cost analysis of their actions to safely keep stores open throughout the pandemic.
The $24 billion in investments include:
- $12 billion for increases in payroll and incentive pay
- $5 billion for increases in benefits
- $3 billion for cleaning and sanitation supplies, labor, and related expenses
- $1.5 billion for technology and online delivery expenses
- $1 billion for non-monetary benefits and vaccine incentives
- $1 billion for personal protective equipment and other safety expenses
Despite the significant increase in expenses, food retailers that responded to FMI’s survey said that profit margins were up in 2020 compared to 2019 (2.50% vs. 1.06%). The increase was driven mostly by the initial spike in sales in the early months of the pandemic. A majority of respondents expect to see sales and profits decline in 2021.