Q&A with: John Dumais, Retail Grocers Association

John Dumais was looking forward to a career as a pharmacist when his father’s heart attack prompted him to leave the Massachusetts College of Pharmacy to help run the family grocery store in Franklin, N.H. He eventually sold the store and went to work as assistant to the president of the New Hampshire Grocers Association. He has been president of the organization for the past 35 years.

Q. What has been the effect of the soaring food prices on New Hampshire grocers? Are they passing it all off to their customers or is some of it cutting into their profit margin?

A. Well, they don’t have much margin, so unfortunately it is passed on to the consumers in most cases. Especially in the cases of the smaller retailers that have gasoline sales. There’s no margin left on that, so all of their costs have to be transmitted to the consumer.

Q. Is some of the business of the smaller stores shifting to the larger supermarkets that enjoy economies of scale?

A. No, I think there’s still a need for convenience. In many cases a small store serves neighborhoods. What’s changing is the actual product that they’re selling. Instead of buying ready-prepared, frozen meals and things that are more costly, they’re buying more make-at-home, bake-at-home food products.

Q. Has there been any decline in the overall volume of sales?

A. No. In fact, there probably has been a little uptick in it. We see there’s more shifting away from going out to a restaurant as often to having more eat-at-home food. But what we’re seeing is a cutting back on the quality of food. Rather than the filet mignon steak, they’re buying the hamburg.

Q. How many grocers do you represent?

A. We represent about 850 right now. That’s all the major chains, supermarkets, the large box stores. We’ve got convenience store chains, and we’ve got independent grocers.

Q. How does it break down between the chains and the independents?

A. Right now, probably 85 to 90 percent of the volume is done by the chains and the rest is done by independents. But it’s the reverse in number of operators. About 80 percent are small independent operators, compared to 20 percent that are large chains. There are probably 600 or 700 independent operators — convenience stores, neighborhood stores, country stores. And there are probably about 200 or 250 of the supermarkets that are large chains.

Q. There’s been a lot of consolidation in the grocery industry with a lot of the big chains now owned by foreign corporations. Is that a problem for American consumers?

A. There is a shift in the volume of food that is being sold by those larger chains, but there are a lot of independents who are still surviving. They’re barely surviving at this point, but they’re surviving.

Q. Other than rising food prices what is threatening the survival of the independents?

A. Fuel costs. Fuels costs everywhere — fuel when they sell to the consumer, fuel in the cost of getting the product to market, fuel costs of the petroleum-based packaging. Anything made out of plastic is petroleum-based. Wholesalers have to put on some additional fuel charge to the businesses.

Q. How labor-intensive is the grocery business?

A. Some stores are experimenting with limiting the number of labor hours that are involved in running a store, but it all comes back to customer, and they’re going to do whatever they have to do to satisfy the customer’s needs. But with computers, with technology, we’re becoming more efficient so we can reduce the amount of labor and get the consumer in and out of the store faster.

Q. Many of the supermarkets now have lines where you can check out yourself, as well as bag your own groceries. Are those catching on?

A. They are. It is starting to grow. We’re seeing it’s more efficient for you to do it yourself. There are some retailers who are experimenting with different concepts. One that we’ve seen recently is where you hand over your cart to a clerk at the store and they process your whole order for you while you get your car and they deliver it to your car. So there are efficiencies in that whole system.

And, of course, the future technology is going to be that you won’t have to go through a checkout lane at all. You just push your cart through this tunnel and it will identify all the products in there and charge your credit card and you’ll be on your way quicker.

Q. What do you see as the biggest challenge ahead for New Hampshire grocers?

A. Right now it’s a question of how we bring the groceries to the consumer with the least amount of cost increase. It’s been fairly stable for about seven years, about 2 percent a year. This year it’s been double that.

Q. People might be surprised or even find it hard to believe it’s only been 4 percent.

A. Well, again, you’re talking about the total food basket is about 4 to 5 percent. Certain commodities get hit a lot harder — dairy products, eggs and milk. Those get hit the hardest.

Q. So what can the grocer do to cut down on the cost of delivery to the market and the consumer?

A. Buy local. That’s the primary thing we can do.