Grocery stores feeling the pinch during current economic downturn
The low price of oil has left financial challenges at the doorstep of many local groceries.
While the oil-dependent Bayou Region’s weakened economy means less money to go around for each grocery, the slumping energy sector affects these businesses particularly in their offshore sales. Those sales, which go to both offshore oil platforms and marine vessels that service the rigs, have fallen significantly from the days of the booming oil and gas market.
Galliano Food Store has seen a sharp decrease in its offshore program. Jaedon Burregi, marketing director at GFS, said offshore sales have declined by about 50 percent since oil price peaked at more than $100 per barrel. According to Burregi, the grocery has not outright lost many offshore customers during the downturn. Rather, those customers’ budgets have tightened as their companies’ revenue has fallen.
“Before it was like a free-for-all. They could really buy whatever they want, or if they went over their limit it wasn’t really a big deal. And now it’s either they got a lower limit or it’s more strict on them,” Burregi said.
Other grocers have seen the same budgeting effects on their offshore sales as well. Donny Rouse, owner of Rouses, said he has seen changes in ordering, such as some platforms ordering select beef instead of prime beef or private label brands instead of national brands. Vince Cannata, owner of Cannata’s Family Market, said while offshore business was still “good,” the slowdown has meant more cost saving in the Gulf of Mexico.
“People are obviously having to take a close look at their budgets and trying to be as efficient as they can with their selection. Overall it’s basically the same process, and they are doing various things to make sure they stay within budgets as their numbers have maybe dropped here and there and pressures associated with trying to keep expenses in line,” Cannata said.
The stores have reacted to the loss in offshore sales by reining in their own costs and pivoting to the onshore market. Burregi said GFS has lost some labor force to attrition during the oil and gas downturn. GFS is looking for better pricing by finding deals from warehouses and vendors. The Lafourche Parish-based grocery is also considering adding online ordering for local customers, which would allow people to write up an order online and pick it up at a scheduled time. Burregi said GFS is still in the process of finding a company that would work best with systematizing online ordering.
“[Offshore ordering is] not the only thing we do here. We’re obviously a full-line grocery store as well. So we do have our customer base and still have our marine and offshore orders. It’s just we decrease employees and as people quit, we don’t re-hire,” Burregi said.
If GFS does implement online ordering, it would be following in the footsteps of Cannata’s, which introduced curbside pickup orders for customers last month. Rouse said his company, which already offers online ordering for offshore orders, is also looking into an online ordering option for land-based clientele. Cannata said the early returns on curbside pickup have been promising, with some customers raving about the service.
“It saves them the time to spend on things that are more important in their lives. It allows you to be more productive in your day. It’s not for everybody, and it’s not for any one person every time, but it definitely plays a role,” Cannata said.
A focus on local sales does not mean the companies have stopped catering to the oil and gas industry, though. The groceries supply necessities ranging from deli meats to toiletries for the men and women working in the Gulf. GFS offers dockside delivery on orders from Lockport to Grand Isle. Cannata said several offshore companies pick up orders, but his grocery also delivers to several ports along the Gulf.
Rouses, a larger corporation with a larger regional reach, provides marine sales at eight stores, ranging from Mobile, AL, to Galveston, TX. Rouse said his business really began to push its offshore business in 2013 and has seen significant growth since then. While oil production has fallen off in the gulf, the store has been able to find new customers inland.
“We’ve had some struggles a bit with the oilfield, but we’ve been able to pick up business on inland rivers and canals, so we’re still doing fine in the marine industry.”
Each grocery has emphasized its own qualities to stick out from competition in the scaled-down offshore market. GFS, with its hyper-local emphasis on southern Lafourche, hangs its appeal on its excellent customer service from a true understanding of the industry’s importance to the region. Rouses uses its large purchasing power to provide the best prices, which Rouse said plays into his company’s hands during these lean times. Cannata said his store’s house-made products are what keep offshore companies coming back for more. According to Cannata, those platform workers love their frozen deli items like sausage, marinaras, gumbos and various pastries, and the freshness the store provide is its main draw.
“They tell us the quality of our perishables in particular make a big difference in their enjoyment, and the fact that we carry a lot of the products their crews love kind of brings a little bit of home to the Gulf,” Cannata said. •