TSN Tyson Foods

By Jaewon Kang and Annie Gasparro 

U.S. grocers are adjusting their operations to try to keep up with customers who are emptying their shelves amid angst over the new coronavirus, even as their own employees face heightened risk of infection.

Across the country, lines to get into stores snaked around corners, checkout times stretched as long as an hour and whole aisles were rendered bare this week as companies told more workers to stay home and schools began to cancel classes.

President Trump on Sunday held a conference call with more than two dozen grocery and supply chain executives, including those from Walmart Inc., Target Corp., Costco Wholesale Corp., Sysco Corp. and Tyson Foods Inc.

Kroger Co. Chief Executive Rodney McMullen wrote in a memo to employees on Sunday that a worker in Colorado and another in Washington tested positive for Covid-19, the respiratory disease caused by the virus. He said the stores will remain open and that the nation's biggest supermarket chain would give paid time off to workers diagnosed with Covid-19 and those placed under mandatory quarantine.

"Our stores, facilities, plants and offices are busier than ever before, " Mr. McMullen wrote.

Kroger and Trader Joe's said they were shortening store hours to give workers more time to clean and restock.

Publix Super Markets Inc., which operates more than 1,100 stores, on Saturday said it would shorten store and pharmacy hours to close at 8 p.m. Walmart Inc. said its U.S. stores would close overnight to clean and disinfect surfaces. Wegmans Food Markets Inc. said it would shorten hours, trim options at its hot-food bars and set purchase limits for foods including eggs, frozen vegetables, boxed cereal and rice.

Some retailers added security in their stores. Target said it has increased off-duty police presence in some stores and Costco said it is adding additional security at a handful of locations. The Washington State Department of Health urged consumers not to overstock.

Food companies had been preparing for greater demand, but the surge was higher and faster than expected, executives said.

"We don't know how to anticipate for that," said Susan Morris, chief operating officer at Albertsons Cos., the nation's second-largest grocer.

She said the company spent the past two weeks adding extra stock at its more than 2,200 stores. But "you get to a point in time where products are simply not available." Albertsons said it is also carrying less variety of goods to speed up the restocking process.

Some of the supermarkets run by Koninklijke Ahold Delhaize NV, owner of the Stop & Shop and Food Lion chains, were running low on bottled water, cheese and other items this week.

JJ Fleeman, president of Peapod, the online delivery business for Ahold, said it expected demand for some items to be several times higher than usual, but the surge this week was several times higher than that.

"We're literally making adjustments in the moment," Mr. Fleeman said.

Peapod said it is adding drivers and warehouse workers and installing more computer servers to handle orders faster. Its website briefly crashed in some parts of the country on Friday while those upgrades were taking place.

Executives say they are confident near term they can meet demand, especially now that many households have "pantry loaded." Longer term they are trying to make adjustments in case of deeper threats to the supply chain.

In the U.K., where online deliveries make up about 7.7% of the grocery market according to research firm Kantar, more than double the share in the U.S., retailers have also warned their services could be stretched as the pandemic advances.

Early Sunday, in a joint letter published in British newspapers, the country's largest supermarkets asked shoppers to "be considerate in the way they shop" and stop buying more than needed.

"There is enough for everyone if we all work together," said the letter. It sought to reassure shoppers that supermarkets were doing everything they could to restock shelves quickly and that online delivery and click-and-collect services were "running at full capacity."

U.S. retailers have experience preparing for surges in demand ahead of natural disasters such as hurricanes and blizzards. This pandemic is unique because it created a similar emergency across the entire country with no clear end, said industry executives including John Ross, CEO of IGA Inc., an association of about 600 U.S. independent grocers.

"The difference here is scaling up contingency plans for a national emergency," he said.

Mark Hogan, a 41-year-old architect in San Francisco, started buying extra snacks and other food two weeks ago. He said the pasta and canned vegetables at his local Whole Foods had run out when he went two days ago. The line at a nearby Trader Joe's on Friday was three-blocks long, he said.

"It seems like at least in San Francisco, the reality completely set in today," he said on Friday.

Warehouse workers and drivers are starting to feel the strain. Steven Spinner, chief executive of distributor United Natural Foods Inc., said during an earnings call this week that it has been challenging to meet the rise in demand over the past two weeks. Distributors and retailers are "spending 28 hours a day" to keep the stocks full, he said.

The delivery operations that other food sellers built out in recent years to compete with Amazon.com Inc. have also been strained because of the sudden demand in recent days.

Amazon Prime Now, the online ordering service that delivers within a few hours, said there were no delivery slots available this weekend in some cities such as New York.

Target on Friday paused next-day delivery of online orders around the country amid high demand from shoppers stocking up on household items. Grocery delivery company Fresh Direct LLC on Thursday warned its customers of delays and said its employees will bring items only to the door.

Supermarket operators are now trying to speed up orders from suppliers and are hiring more workers in stores to refill empty shelves. Albertsons' Seattle division said on Thursday that it is hiring drivers and in-store workers immediately.

Mike Fogarty, owner of a two-store chain called Choice Market in Colorado, said his team has been working around the clock to try to keep shelves full. They ran out of rubbing alcohol and some cleaning supplies this week and he expects some dried foods to sell out this weekend.

After his supplier told him it couldn't supply toilet paper for his chain until April 1, he found a manufacturer that makes larger rolls for stadiums and concert venues. He worries he won't have as much luck replacing some other goods such as produce if suppliers choose to first serve bigger retailers asking for more product.

"It's fundamentally a whole new era," he said.

The manufacturers of toilet paper and other items flying off store shelves say they are ramping up production to meet higher demand for their household essentials and long-lasting foods.

John Church, chief supply chain officer at General Mills Inc., said his team is making last-minute changes to where it sends inventory to meet demand. "We have plants running at near capacity," he said.

Conagra Brands Inc. is devoting more of its factory lines to top-selling items. Campbell Soup Co. Chief Executive Mark Clouse said the company is lining up multiple suppliers for important ingredients, in case factories around the world close.

Michael Kirban, CEO of Vita Coco, said he is ramping up production of his coconut water in Brazil to meet high demand in the U.S. He said weekly sales have spiked 200% at Walmart.com and 60% at Amazon.com.

"No one can prepare for that. Not even Amazon," Mr. Kirban said.

--Alex Leary contributed to this article.

Write to Jaewon Kang at jaewon.kang@wsj.com and Annie Gasparro at annie.gasparro@wsj.com

(END) Dow Jones Newswires

March 15, 2020 16:02 ET (20:02 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.