Kantar analysis: impact of consumer stockpiling on supply chains

FacebooktwitterredditpinterestlinkedinmailFacebooktwitterredditpinterestlinkedinmail

Ray Gaul, senior vice president of retail insights EMEA at Kantar, analyses the supermarket supply chain challenges in wake of Covid-19

The major supermarkets will all have products already in their warehouses, normally 2-4 weeks of supply with consumers purchasing at a usual rate. The challenge they will be facing, is physically getting the products onto shelves to sell them. The big retailers will have likely prepared, and topped up orders a few weeks ago, so we can expect them to have more stock than normal at this time of year. At the same time suppliers are increasing production where they are able (not China, Italy or Korea), but with limited shipping capacity, delivery will likely be slower.

This will be exacerbated by pressures on staff – like most other sectors, staffing numbers are reduced by a proportion self-isolating, and many are operating one-worker-one-space policies in order to comply with government social distancing recommendations. The result is we’re seeing managers quickly changing how they operate a store. Instead of stocking products on a shelf, we are likely to see a lot more stock sat on pallets on the shop floor.

Panic buying

The challenge is not necessarily one of not enough supplies, but that panic buying is happening in every country in the world – not just the UK, so suppliers will be fulfilling orders on a first-come-first-serve basis, making supply unreliable. For example – hand sanitizer destined for the UK might have been fast-tracked to Australia or the USA to meet shortages in those locations.

The current situation has led to many restricting the amount of goods each person can buy. Limited hours and priority access for elderly and vulnerable people will go some way to improve the situation and control demand.