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Why grocery stores are struggling to fill empty shelves

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Yahoo Finance's Julie Hyman and Brian Sozzi discuss retailers' difficulty in getting food and supplies from warehouses due to a spike in Omicron cases and wintry weather in the Northeast.

Video Transcript

[MUSIC PLAYING]

JULIE HYMAN: Well, if you've been to the grocery store lately, you might notice it's looking a lot like March, or April, or May of 2020. Brian Sozzi, what's going on?

BRIAN SOZZI: Well, you're seeing a lot of out of stocks, Julie. And something I saw in Whole Foods over the past weekend. But it's also something Albertsons CEO Vivek Sankaran is seeing. The company's stock was blasted yesterday on its earnings report, in part, I think, because they're acknowledging some challenges keeping their shelves stocked.

Sankara know, we were-- noting, we were expecting that supply issues to get more resolved as we go into this period right now. Omicron has put a bit of a dent on that so there are more supply challenges. And we would expect more supply challenges over the next four to six weeks.

And those fresh items, Julie-- milk, eggs-- those quick turning items that appear to be tough to get to shelves for whatever reason or for the most part, because workers are not necessarily in these plants because of the Omicron variant. And I know you went to Trader Joe's and you saw some empty shelves of your own.

JULIE HYMAN: I did. I did it Sozzi style and took some pictures of those empty shells, as you are one to do. That's the bread section, empty almost entirely. A lot of the fresh food sections were empty. You see on the right side of that photo there, a sort of shade that they had pulled down over that section that was empty, so that's some of the fresh food. A lot of the produce was out.

I was told at the store it had to do with difficulty in getting stuff from store-- from the warehouse, which I guess was in Pennsylvania, in part because of weather. Because in addition to everything else going on, of course, there's been some icy and snowy weather in the Northeast. That's our producer Pam Granda. She took some similar photos, also at a Trader Joe's.

BRIAN SOZZI: That is a hashtag, #ZombieShelves right there. Wow, it's very startling. But again, so many people are dealing with this, Julie. Another company that is dealing with it, it's Conagra. We just talked to their CFO after their earnings report last week. He told us they are seeing absenteeism in their manufacturing plants, will continue to be a problem for a few weeks.

DAVE MARBERGER: We have seen a spike with Omicron very recently. But I'm going to pivot back to when COVID really started in March of 2020, we've been in a mode, as an organization and as a supply chain organization, of managing disruptions in our labor force going back that long.

And so literally, every day that we come in, we have a call with the entire supply chain where we look at, you know, where-- across all of our manufacturing plants, what's the absenteeism? You know, whether somebody caught COVID or they're being quarantined. And how are we going to mobilize around running our production lines. And so that's actually become kind of normal course for us.

BRIAN SOZZI: And reading these stories, Julie, you take a step back and think, well, why is this happening? The reality is we're all still working from home. And this has been ongoing for years. And now in many cases, it's still it's picking up, if you are one to be infected with the Omicron variant, or Delta, or just COVID more broadly. And that is leading to just more sustained sales of at-home stuff.

And look at this chart from Axios just showing a hair care product demand using Google searches. You could see just this sustained high level in products, daily use products, because we all continue to be at home. You could see that demand, Julie, has settled in just at a higher level than prepandemic levels. It has declined a little bit, but you could see it pick back up right now during the Omicron variant surge across the country. But again, at a higher level than pre-pandemic.

JULIE HYMAN: Yeah, and put that together with a lot of people being sick-- whether it be drivers, people working at stores, people stocking the shelves, people making this stuff-- and you have a recipe for those zombie shelves, as you called them. So we'll keep an eye on this phenomenon. Thanks, Sozz.