A grocery store general manager explains how inflation affects Philly shoppers

It was a cold, rainy night last December and Weavers Way Co-op general manager Jon Roesser had almost called off a members’ forum. When just two women showed up, he thought, “Oh my god, I’m gonna be here for the next two hours for two people.”

But it turned out to be “one of the best member forums I ever had,” Roesser said, because the members had come for two very different reasons.

“‘Listen,’” said the first woman, “‘I’ve been a member for a really long time. I love Weavers Way. I feel like I can’t afford to shop here anymore because it’s all the local stuff and the organic and the grass-fed beef and the fair-trade this. I’m finding myself doing more and more of my shopping at Acme.’”

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The second attendee was also shopping elsewhere: at Mom’s Organic Market. “She said, ‘When I shop at Mom’s Organic, I can shop with my eyes closed because they have such a strict policy and I don’t have to worry.” At Weavers, where conventional groceries are occasionally mixed into inventory as cost-saving offerings, she had to be more discerning.

Grocery managers have always had to grapple with balancing quality inventory with pricing and profit margins, but inflation has exacerbated the issue. ”In the last year, it has gone from a problem to … it’s all we think about,” Roesser said. In advance of Thanksgiving, he sat down with The Inquirer to talk about food prices, shoppers’ habits, and why Philly is better off than some other cities when it comes to buying groceries.

This interview has been edited and condensed for clarity.

Compared to last year, the retail price of meat and seafood is 10% to 12% higher. The wholesale prices that we’re getting charged are up 16% to 18% They’re up in all categories. Some — like frozen food — are not up that high. Dairy is 6% or 7%. In general, comparing a diverse basket this year with last year, [overall the price] is up somewhere around 5% or 6%.

We see it in two areas. Our operational costs have increased. Wages are up. This time last year, our entry-level wage was $13.50. Now it’s $14.50. But even that doesn’t tell the whole story because we’ve had to be so aggressive with our raises to retain existing staff. Our labor costs, our fuel costs, packaging costs, our credit card merchant processing fees — one of those back-of-house things that nobody thinks about but it costs us like $400,000 a year — those are all up.

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We also see it in our cost of goods, which is vendors charging us more money for the stuff that we buy from them and then turn around and sell to our customers. That’s inflation that we can at least make decisions on. “Are we going to raise our retail price by the same amount? Or are we going to make the strategic decision to hold the line on the retail costs and take a margin hit?”

We have weekly meetings with meat, seafood, deli, produce, bakery. The different teams deliberate and look at industry-standard margins for each category as a starting point. Then we have to be mindful of the marketplace. We look at Whole Foods, but also Giant and Wegmans and Reading Terminal. Our gang is pretty savvy about the marketplace.

We look at what cost-of-goods increases came through in the last week. We aim for collaboration, hoping to make unanimous decisions regarding what to do. Occasionally a decision gets bumped up to me. We had this issue in the spring regarding bagels. We got a price increase to the point where we had to go above the 99-cent threshold, which is like kryptonite. We could not agree, so it did come down to me, I had to make the call to go up to $1.09 a bagel. We saw no reduction in our bagel sales, so that worked out. But sometimes it doesn’t.

Well, the pandemic has played havoc with traditional shopping patterns, which has made it difficult for us to answer that question. Before the pandemic, our average basket size was $28. That includes people coming in and spending $200 on a weekly shop and people coming in and buying a bag of chips and everything in between. As predictable as the sunrise, it was $28. Then COVID happened and the number of transactions collapsed, but the basket size skyrocketed. As things have ebbed back, here we are in November 2022 and our average basket size is now $34 or $35. But the question is: How much of that is inflation-related vs. real?

People complain to me all the time about all kinds of stuff, but I have not been getting complaints about prices. Now there’s plenty of people who feel that the co-op is an expensive place to shop, but they’re not complaining to me — they’re just not shopping at the co-op.

I think by and large there’s a certain level of understanding. People get it. We’re not experiencing open hostility to us trying to stay on top of inflation.

[Looks dubious, laughs] There are a lot of options out there for people. It’s not in my best interest to encourage people to shop anywhere else, but I’ll give you an example. Lidl, the German discount grocery that competes with Aldi, right now they’re offering a $30 Thanksgiving dinner package, which includes a relatively small frozen turkey and sweet potatoes and stuffing and probably some rolls and green beans and I’m not sure what else they throw in there. So if you’re hosting a group of eight or 10 people and price is paramount, deals like that are out there. And then you can just come to Weavers Way and buy a really nice MyHouse pie or something.

The good news here in Philadelphia is that the grocery marketplace remains highly, highly competitive. There is no one big dominant grocer like in some cities. In Florida, it’s Publix, that’s it. Go to Cleveland, Ohio, it’s Kroger. And that one galoot gets to really command a lot of what happens. In Philadelphia, it’s highly fractured. It used to be Acme was the biggest, I don’t know if that’s true anymore. So we’re all competing with each other and that is beneficial to consumers.

I doubt it. Unless a wholesaler finds themselves in a position where they have to start selling their product for a lower price in order to be competitive, what’s their incentive? You’ll probably see it in other areas like housing or cars, but not in grocery. All we can really hope for is stabilization.

Weavers Way has three locations, in Mount Airy, Chestnut Hill, and Ambler. A fourth location, in Germantown, is anticipated in late 2023. weaversway.coop