00:00:05:00 – 00:00:23:12
Sylvain
Ladies and gentlemen, welcome to Digital Grocer. Season 5 Episode 7. I’m your host Sylvain Perrier and joining me today from the safety of his basement with the beautiful wilderness landscape, in the back is my co-host, Mark Fairhurst. Mark, how are you today?

00:00:23:12 – 00:00:27:19
Mark
It’s great to be here. This landscape I don’t have to pay for.

00:00:28:06 – 00:00:34:26
Sylvain
It’s free and thanks to the folks at Apple who are sponsoring you, maybe; maybe not.

00:00:34:26 – 00:00:38:14
Mark
Well, no, I sponsor them. I spend enough money on their products.

00:00:38:14 – 00:01:03:07
Sylvain
You do. You do too. So, hey, we you know, to our listeners, we recently completed a 3 part series where we interviewed some fantastic guests Zac Wilson, Director of e-commerce over at Raley’s, John Lucot, retired president and chief operating officer (COO) from Giant Eagle, and one of my favorite episodes with Claire Fan, who’s the chief economist at the Royal Bank of Canada.

00:01:03:27 – 00:01:06:22
Sylvain
And we tackle some interesting topics.

00:01:06:22 – 00:01:07:15
Mark
Yeah.

00:01:07:15 – 00:01:40:11
Sylvain
Retailers emerging out of the pandemic, the effects of call it inflations, stagflation on the consumer and the retailers. And, you know, we kind of wax a little bit philosophically what’s going to be the long term effect on consumers. One of the items that we didn’t cover in that 3 part series that we recently put out was how are regional retailers handling the changes in the landscape?

00:01:41:00 – 00:02:04:06
Sylvain
And all of this while competing and Mark and I, you and I talk about this a lot, is competing against the likes of the Walmart’s and the Kroger’s and the large, you know, tier 1’s in the United States, which on any day isn’t easy. I think most of you guys know this who listen to this show or know us quite well.

00:02:04:06 – 00:02:26:02
Sylvain
Mark and I, on a quarterly basis, we love to jump into a car, cross the border and then spend an obscene amount of time driving and an obscene amount of time driving, and visiting retailers and specifically regional retailers, because we want to get to the heart of their operations. We want to visit the stores. We want to understand how e-commerce is working for them.

00:02:26:02 – 00:02:53:19
Sylvain
What are they seeing as a challenge? We also like to compare prices on products because it gives us a sense of what’s happening in our own market and also what’s happening across the various markets in the industry. On one of those specific trips that we recently took, we did a pit stop in Ohio, and we had a chance to meet meet up with Michael Davidson, the president and CEO of Buehler’s headquartered in Wooster, Ohio.

00:02:54:04 – 00:03:15:08
Sylvain
Funny story. Our second chairman which we dearly miss, Bernie Nisker, was actually a semi-pro baseball player and lived in Wooster, Ohio. And I actually drove there my first time going to Wooster. I drove them back to kind of visit some old friends. Now, for those of you who are not familiar with Buehler’s, they were founded in 1929.

00:03:15:09 – 00:03:38:29
Sylvain
They operate 13 locations that serviced the northeastern part of Ohio. And Michael is a tenured executive who prior to joining Buehler’s worked for such retailers as Price Chopper, Marsh Supermarkets and Tops. And he was recently appointed to Buehler’s as board of directors. And I want to welcome Michael to our show today.

00:03:38:29 – 00:03:40:07
Mark
Hi Mike.

00:03:40:07 – 00:03:43:04
Mike
Good morning, Mark. Good morning, Sylvain. How are you guys doing?

00:03:43:04 – 00:04:02:28
Sylvain
Fantastic. It is a pleasure having you on our show. Now we have some great questions lined up for you to kind of help educate our audience. Let’s just jump right into it. Mike, what are regional retailers like Buehler’s doing to minimize the impact of inflation, stagflation on their customers?

00:04:02:28 – 00:04:05:21
Mike
Yeah, well, Sylvain, great question.

00:04:05:21 – 00:04:32:10
Mike
And listen, you know, the beauty of being a regional retailer and competing versus Tier 1 retailers is that we have a great tool box, you know, to help our customers to all situations. And, you know, as we deal with inflation, you know, during the last 12 months or so, we have a great tool box. And I think the most important thing we can do Sylvain is, you know, to be an advocate of our customers.

00:04:32:10 – 00:04:53:27
Mike
You know, the beauty of being a regional operator is that we understand who our customers are, we understand what they’re going through each and every day. So, you know, when I say be an advocate of our customers, you know, we saw inflation come in. We started seeing our costs move up. And as you know, we know the necessity to pass those up, you know, increases on, but we also know where our customers are.

00:04:54:08 – 00:05:18:20
Mike
So, you know, when I talk about a toolbox, you know, first off and most importantly, you know, we push back on inflation. You know, sometimes when when somebody is going to tell us there’s going to be a cost increase, we just don’t accept that. We ask about it. You know, why, what, where, you know, what’s creating situation from their perspective and then we talk about delaying the increase, you know, and then we also talk about movement.

00:05:18:20 – 00:05:48:24
Mike
And listen, if our customers aren’t going to pick up that item because of a retail price, that’s not a benefit to anybody. So, you know, we’re an advocate of our customers. We push back, when I say CPGs commercial packaged goods companies out there and by the way, I mean, if somebody, you know, is pushing for a cost increase that’s going to create a retail increase, then we look for, you know, a local supplier in alternate to supplier competition in the marketplace is what we are about, right?

00:05:48:24 – 00:06:13:06
Mike
So we create that competition. And if somebody comes up with a better cost, we’ll switch. That being an advocate of our customers. You know, we have an ad that we publish each week and you know, we also do omnichannel marketing. You guys know that well. And you guys are experts, right. So when we reach out for our customers, you know, we try to put a package together that helps them each and every day, feed your family.

00:06:13:06 – 00:06:37:09
Mike
We represent that in our ads and we represent that online. Just last week, just this morning, we were reviewing an Ad and, you know, we had a sub in there. We had Buehler’s chips and 1.25 soda in there and all for $12 bucks. And, you know, you could feed a family for 3 for that package. So we what we call in our industry, we call that bundling.

00:06:37:21 – 00:06:55:00
Mike
So we try to do deals together for our customers and by the way, in-store display them. So when they come in there, they see that, you know, that’s a great deal. If you need a family for three for $12 bucks, I mean that did well for us and you know, we continue to do that with many items from bundling.

00:06:55:24 – 00:07:06:24
Mike
We’re a one stop shopping environment here at Buehler’s. You guys take your time to be out, by the way Sylvain, how did you get across the border? That’s probably the most [inaudible]

00:07:06:24 – 00:07:12:05
Sylvain
It was our first smuggling. Reverse smuggling is the easiest way.

00:07:12:25 – 00:07:21:00
Mike
Yeah. You know, we’re one stop at Buehler’s, we’re fortunate to have stores that allows our customers to come in and do their shopping.

00:07:21:00 – 00:07:46:14
Mike
And, you know, with the price of fuel in the United States and worldwide right now, you know, customers are seeking that. We see that in our numbers, right. That, you know, that trips are down a bit. Customers are trying to consolidate trips and you know, be more efficient when they’re out in the marketplace. So, you know, they’re able to come in by health and beauty aid, we have GM, you know, certainly a fresh we have certainly some center store products.

00:07:46:14 – 00:08:06:14
Mike
So, you know, we really try to focus on that. By the way, we are a company that has, you know, a loyalty program and our loyalty program is really a good program the more you buy. I mean, if you buy $500, you get $10 back, you know, and anytime someone is giving you $10 bucks back, you know, and on a shopping experience feel pretty good.

00:08:06:25 – 00:08:28:18
Mike
You also can take our loyalty programs. You don’t want the dollars, you can get fuel, you know, at a local station, speedway stations. We make sure our customers understand that, you know, so no, no benefits. It’s a great benefit for everybody. When you pull that gas pump and you say, yeah, I want to use my fuel points in that price drops whatever, $4.50 down to $4.00 a gallon.

00:08:28:28 – 00:08:59:12
Mike
That’s a nice savings for customers. And they see that. So by the way, online shopping, omnichannel. You heard me talk about the deals we put on there. But again, you know, just savings for customers. We see more and more of interesting dynamics. You guys know this. You we talked about it when you visit us, you know, people using online aren’t always people you think would be right. So, they use it because, you know, it’s cheaper than traveling to a supermarket sometimes for them right.

00:08:59:12 – 00:09:20:22
Mike
He would rather have it delivered to their house, saved on gas saved on the trip, save on the babysitter. So, you know, we’re trying to use every tool we have to help our customers battle through this inflationary pressure. And then finally, private label, I think you know, with the guests you’ve had in your last 3 podcasts, I’m sure someone spoke about that.

00:09:20:22 – 00:09:45:13
Mike
But, you know, private label we have a great program, our family, that allows our customers to buy, you know, cheap product that’s, you know, as good as a national brand at a better retail and, you know, we try to represent that in our ad and in our stores. We have an ad coming up, we call “a stock up sale” that, you know, should be private label related case related and, you know, always thinking about our customers that way.

00:09:45:13 – 00:10:08:21
Mike
So, you know, the beauty of being a regional operator, a great advantage versus those tier 1 people you’re talking about is that, you know, we’re in we live in this market, all the time. We owned, we live here. We do our work here and by the way, when we step out of line some way, my neighbor tells me that, my wife has a crazy place out there.

00:10:08:21 – 00:10:13:06
Mike
Fix it. And I hear that pretty directly from our customers real quickly.

00:10:13:06 – 00:10:15:06
Sylvain
Awesome.

00:10:15:06 – 00:10:29:16
Mike
Yeah. Great, great, great battle going on. And by the way, you know, it’s not stopping. I mean, we’re starting to see some encouraging signs and, you know, commodities going down a bit. But, you know, it’s still, you know, a significant issue for retailers and the fuel price.

00:10:29:16 – 00:10:47:23
Mike
You know, it’s not just the cost of goods, it’ss the fuel surcharges that are just unbelievably hitting us at this point in time. It’s the biggest I’ve seen in my lifetime. I’ve been around a bit and not seen this type of pressures on retail and or costs in quite a while. So.

00:10:47:23 – 00:11:11:02
Sylvain
Wow. And so this is great insights and Mark, I think we have a subject we have to tackle in our future show. And Mike touches on this and much like Zac did 3 shows ago is are… And the question would be are consumers and our numbers will show this very shortly that we’re going to be releasing,

00:11:11:02 – 00:11:29:26
Sylvain
are consumers leveraging e-Commerce delivery to save on fuel? And Zac at Raley’s made a comment that the observation that they’re seeing in California that there is a subset of consumers that would rather have things delivered; because they will save on fuel and that Mike touches on that now.

00:11:29:26 – 00:11:44:24
Sylvain
So that’s very interesting. I think I think we have to challenge our listeners if they are specifically the retailers, if you guys are seeing that your data sets reach out to us. We’d love to have you on on a specific show just to talk about this. This is real.

00:11:44:24 – 00:12:09:00
Sylvain
One of the things we saw, you know, at the top of the pandemic, you know, our travel across the United States is and especially in Canada as well at the time, retailers were dealing with the labor shortage issues are you guys seeing that, Mike, in your market’s specifically, where it’s still a challenge to, you know, get back up to capacity with labor?

00:12:09:00 – 00:12:41:24
Mike
yeah. Well, you know, listen, so we’re much better this year Sylvain than we were last year, right. So this year, you know, we have about 2500 associates. We probably had 350 openings that we couldn’t staff, you know, so this year we just reviewed it. This morning we’re down to about 140 and there are certain pockets that have problems. But let me let me expand on that a little bit because, you know, I mean, what I’m seeing in the marketplace, I mean, there’s a great restaurant in Ashland, Ohio, that was attached to a golf course.

00:12:41:24 – 00:13:11:27
Mike
They’re closed because they can’t staff. I tried to get a Starbucks coffee last night at a local shop and, you know, they had their mobile ordering turned off because they can’t staff it. You know, we have some offerings. We’re trying to get out into the market. We’re doing, you know, a hot pizza program that, you know, we would be negligent if we tried to pull that off now because we don’t have the staffing to get that done.

00:13:12:11 – 00:13:45:14
Mike
You know, so, you know, are we serving our customers? Yes. Are we having continued problems, you know, attracting, retaining associates? Sure, we are right now. Have we addressed it with you know, our compensation program? We sure have. And it’s the right thing to do and we had to respond to the marketplace. But and then on top of that, I think what’s happening now is you know, starting to talk about it more and more is that, you know, that BA5 variant of COVID, you know, at least in the United States is starting to show its ugly head a little bit.

00:13:45:14 – 00:14:02:04
Mike
You know, we’re not you know, we’re near where we were in, you know, some of the other spikes. But, you know, I’m hearing that more and more that, you know, our stores are losing people. Hey, I’m out. I’m out. You know, it’s good to see it’s good that people are stepping away from the workplace when they, you know, tested positive.

00:14:02:04 – 00:14:28:14
Mike
But we’re seeing that more and more now. So that’s again, hovering over above us at this point in time. So, yes, we are having labor shortages. We’ve taken some great steps to fix it. I mean, you know, that’s that’s who we are as, you know, our country’s. I mean, who else would fix unless we do and we’re trying to fix it and doing the right things to make sure we retain the best people we can.

00:14:28:26 – 00:14:40:03
Mike
And, you know, that’s kind of where we’re approaching it, you know, and that’s I don’t see that I don’t see that changing in the short term. I think the way we work will be different.

00:14:40:03 – 00:14:50:03
Sylvain
Yeah, I agree and certainly Mark and I we consume the media in Europe because it’s always a good leading indicator what’s going to happen here.

00:14:51:15 – 00:15:02:21
Sylvain
BA5 is so much quicker in terms of manifesting its symptoms. France right now is experiencing 115,000 cases a day.

00:15:02:21 – 00:15:03:17
Mike
Wow.

00:15:03:17 – 00:15:25:24
Sylvain
And so we can imagine what’s going to happen. You know, we’re seeing here in Canada, it’s a dominant variant here. And I, I dread to think what the fall is going to be like, went back to school occurs and it concerns me in terms and what do we need to do to prepare. You have an action plan in place which is fantastic.

00:15:26:12 – 00:15:40:03
Sylvain
And all through kind of all this machination of change and Zac talked about this on his episode where they’ve seen a shift in consumer behavior. Mike, are you guys seeing the same thing in terms of a shift in behavior?

00:15:40:03 – 00:15:48:19
Mike
Oh, yeah. The consumer, you know, in regard to purchasing power Sylvain, I think you talked about, what we’re doing, no we’re you know, we’re absolutely seeing that.

00:15:48:19 – 00:16:11:07
Mike
And I know in the American economy, I mean, it was a lot of dollars in the marketplace. Right. You know, a lot of this money was sent down and it’s still playing into it, you know, but yeah, no, we’re seeing, you know, unit movement downward, which is an inflationary issue, right. So you’re inflation goes up, your units go down and, you know, we’re starting to see that accelerate.

00:16:12:12 – 00:16:28:26
Mike
In the stores a lot in our stores. The beauty of being a regional guy, you know, so I’m out there a lot and, you know, I’m hearing it from customers. You know, I hear pretty clearly from customers when we look at our department sales, I mean, we see certain departments, which would be more price sensitive or luxury orientated.

00:16:29:10 – 00:16:53:02
Mike
Seafood is a great example. I mean, throughout the industry, seafood sales are down, people aren’t buying $14.99 lobsters, $27 halibut or things of that nature. I think, you know, there’s pressure on that market. We’re seeing that in GM, you know, our sales of, you know, patio outdoor dining sets, you know, $400 or $500 bucks people have stepped back this year a bit.

00:16:53:13 – 00:17:13:18
Mike
And then, you know, United States, we absolutely are seeing that in beer and wine as well. You know those are what we would say or items that you would have you know you know if you’re a customer you’re making decisions. Do I need to buy that? Do I want to buy it? Do I have to buy it? And I think you see a little bit of that going on throughout the industry right now.

00:17:13:18 – 00:17:35:07
Mike
So we see that happening and we anticipated that will continue to happen. As you know, money dries up in the market. We were talking today about back to school in the United States. You know, last year during the pandemic, last couple of years, you know, our government, you know, paid for everybody to have a free lunch while they attended public schools.

00:17:35:13 – 00:17:52:20
Mike
Everybody, you know, had free lunch or that ended this year. You know, so, you know, as we go back to school in August and September, I mean, we find that it’s an opportunity for folks that didn’t need lunch meat, peanut butter and jelly bread. You know, now now they need it again because, you know, the free lunch are going to be there this year.

00:17:52:20 – 00:18:13:28
Mike
So, you know, we see behavior change, no doubt about it. And then you’re certainly generational as well. Ready to eat foods. You know, people are busy. They’re back to work. And, you know, I think that’s the meal deal I talked about. You know, how do I meal to the table that I’m not spending, you know, $50 bucks on. I went to a sub spot the other day.

00:18:13:28 – 00:18:25:05
Mike
And, you know, I had a couple of subs and it was, you know, $37 to so you know that’s you know, that’s pushing people in a different way. You start, whoa, wait a minute. You know, that’s pretty expensive.

00:18:25:05 – 00:18:36:07
Sylvain
Yeah, that’s expensive and interesting you touch on that kind of leads to the next question and we tackle this with our, the RBC economist that we had on, on the last show.

00:18:37:01 – 00:19:04:28
Sylvain
You know, it’s clear that the climate right now is challenging in Canada, there was a recent announcement that interest rates have gone up by 0.75, so 3 quarters of a percentage point. And retailers are about to go into planning for 2023. Mike, in your experience, where and what should they be focusing on for their planning?

00:19:04:28 – 00:19:08:11
Mike
Yeah, well, you know, we’re all you’re right on target.

00:19:08:11 – 00:19:25:23
Mike
We’re very we’re stepping into our 2023 plan and you know, we have a 5 year plan, you know, but you know, one of the things I would say right away is that you know, as we look at 2023, you know, the elephant in the room for us is that you know we experienced 8-10% inflation in 2022.

00:19:26:07 – 00:19:48:11
Mike
Now we’ll cycle little bit of that, as we get into the second half of the year from last year. But you know, the question is how do you, how do you budget sales when you have inflationary results 8% to 10%. You know, so you could take that out of your starting point and then try to you know, get sales to where it needs to be at that point in time.

00:19:48:22 – 00:20:09:09
Mike
And I think, you know, the problem then becomes as you, you know, look at your sales and then say to yourself, hey, you know, we’re not going to get to the same level of sales. And by the way, you know, 2021, you know, or certainly pandemic influenced, positively. And now 2022 a little bit of a pandemic or more importantly, inflationary driven.

00:20:09:13 – 00:20:29:01
Mike
Right as we go through this year. You know, next year, you know that you know, you’re going to have to overcome that and you know as your revenue is reduced, you know then certainly the way we got to look at it is how do we how do we reduce expenses to make sure that we are you know, doing the right thing for our business at the same time.

00:20:29:01 – 00:20:45:19
Mike
Right. So that’s going to be the biggest challenge in the room for next year, you know, and then, you know, we’ll see what happens in the fall. With with the variant and how that plays out, you know. But, you know, that’s it’s going to be a challenging year at 2023. And we all hear the R-word pretty right now.

00:20:45:19 – 00:20:46:03
Sylvain
Right?

00:20:46:03 – 00:20:46:11
Mark
Yeah.

00:20:46:11 – 00:21:05:11
Mike
I mean recession word from, you know, the financial publications, you know, some of the government officials, you know, talking through some of those things, the strength of economies. And you look at Europe, I mean, you’re certainly, you know, being challenged here. And, you know, I would, I would expect that, you know, we have some challenging work in front of us.

00:21:05:12 – 00:21:29:03
Mike
We have strength in the United States economy still. But there’s no doubt signs that, you know, there are some warning signs out there. And you talked about interest rates. You talked about the home housing market, consumer confidence, the GDP that was down in the first quarter. We’ll see what happens now as we complete the second quarter. So there’s a lot of, you know, headwind we’re facing that we’re going to have to play into in 2023.

00:21:29:17 – 00:21:49:00
Mike
By the way, you know, I’m an optimist, you know, so you know, while those are issues that we got to deal with, this is not the first time we’ve dealt with them. All right. So, you know, again, we have to do the things, the beauty of our company. I’m never excited about a recession. But you know, we’re we’re close to our customers here.

00:21:49:04 – 00:21:57:25
Mike
And you can be sure that, you know, as we continue to fight for our customers each and every day, we’ll continue to do that in 2023.

00:21:57:25 – 00:22:10:17
Sylvain
Yeah. I think the big thing for the listeners to understand the situation we’re in right now. The last month, the U.S. added over 200 plus thousand jobs.

00:22:10:17 – 00:22:15:00
Mike
Last week Friday’s report was, you know, a better than expected. Right.

00:22:15:00 – 00:22:40:23
Sylvain
Yeah. And you know versus Canada where we lost 50,000 jobs which is very odd in this case here. So the US economy is extremely resilient. The one thing that in the last two years and I think through the pandemic there’s this rapid explosion of technology that has really influenced grocery retail and very much competing for the customer share of wallet.

00:22:41:06 – 00:22:51:09
Sylvain
What can regional retailers like Buehler’s do to encourage customers to remain loyal to you, the retailer.

00:22:51:09 – 00:23:07:11
Mike
Well I listen, you know I really enjoyed the time we spent together. Mark and Sylvain and I, we all talked about that. I think the most important thing for us is to be where they are. You understand what I’m saying? And, you know, you need to be where the customers are.

00:23:07:11 – 00:23:30:08
Mike
And we need to be interactive in that in that in that forum. So, you know, whether it’s, you know, on a on a cell phone, whether it’s on a, you know, a digital piece that they have in a home, an iPad, a computer, whether it’s in paper ad, you know, we need to meet them where they are and make sure that our communications – get there’s a lot of competition for that customer reach.

00:23:31:22 – 00:23:46:25
Mike
You know, they can go where they want, right? I mean, if I if I want to buy a widget, you know, I could sign on to my computer now and find the best place for a widget in the United States and quite frankly, probably have it delivered to my home. You know, by the time I get home tonight.

00:23:46:25 – 00:24:06:11
Mike
Great. It will be on my in my garage, you know, so, you know, we got to make sure we meet the customer where they are, communicate effectively and simply with them and then deliver on what we we said, you know, I knew a guy in our business a while back. His name was Bob Miller. He was a senior executive for Albertsons.

00:24:06:11 – 00:24:26:28
Mike
He was the CEO of Albertsons for years. You know, one thing Bob said is, you know, the grocery business, we shouldn’t complicate, you know, and it’s it’s a business that you need to be you need to have a clean store. You need to have fresh, perishable’s that need to be in stock. You need that service your customer and you need to have reasonable, reasonable prices.

00:24:27:11 – 00:24:50:02
Mike
And I think if you do those four or five things and do them or well, I think, you know, our customers and the customers see that, you know, they’ll respond accordingly. The American consumer does, you know, and, you know, they would local we’re owned by, you know, our teammates. And, you know, we need to be where our customers are, meet their needs.

00:24:50:04 – 00:24:57:27
Mike
That’s always a key under any circumstance, right. I mean, the needs change we need to meet. We need to understand them and meet them.

00:24:57:27 – 00:25:21:27
Sylvain
Absolutely. Well said. I think there’s something to be said when there are people from head office at Retail, Buehler’s does this really well. And I wish it was done more consistent more consistently outside in the industry is send your vendors send, all your team to go in a store to interact with customers.

00:25:21:27 – 00:25:38:09
Sylvain
Because I think that’s where you start to understand the applicability of technology, as well as who are you serving at very very, very critical. And Mike, I want to say thank you so much for joining us. It was fantastic having you on the show.

00:25:38:09 – 00:25:40:22
Mark
Yeah, fantastic show, Mike. Thank you.

00:25:40:22 – 00:25:51:27
Sylvain
Folks. Thank you so much. We’re going to have a as soon and new show to drop after this one. Listen to us on YouTube, our website and peace and we’ll talk to you guys soon.

00:25:51:27 – 00:26:11:21
Sylvain
Thanks for watching and listening to our show. We’ve got more great episodes on digitalgrocer.com and we’d love to connect with you on social media, @digitalgrocer on Facebook, Instagram and Linkedin and @digital_grocer on Twitter. Like, subscribe, and click that bell icon so you never miss another digital grocer podcast.