I drove past my local Tesco on Sunday morning, “drove past” being the operative words! Security had most roadways in and out of carpark coned off and there was a crowd reminiscent of Stamford Bridge just before a Chelsea home game queuing in a less-than-orderly fashion outside. Leaving aside the obvious health risks of what can only be described as disorganised chaos devoid of any attempt at social distancing, truth is I couldn’t be bothered to join the hoards and happily decided chicken gravy granules weren’t that important anyway!
These are very interesting time for someone who studies consumer behaviour and retail marketing. Is the panic-buying as bad as it seems on TV (or did outside my local Tesco)? How much of the empty shelves are down to the customer and is the retailer really that blameless in all this? And what will the longer term implications be for supermarkets themselves?
Well, to dispel the myth, consumers are not hoarding endless supplies of loo rolls and pasta as the media would have us believe, at least not according to data from market research agency Kantar reported in Marketing Week. In fact, UK average spends were up only about 16% overall the week this hit the news and, despite a blip of 60% and 55% increases in toilet tissue and pasta respectively, things pretty soon settled down again. Moreover, only less than 6% of shoppers accounted for these peaks anyway, the vast majority of us just buying the occasional extra pack of something, often in response to media frenzy. Most of us, it seems, are “accidental” hoarders at the moment.
So what of the behaviour of the supermarkets themselves? Those who work on the front-line in retail food stores are, quite rightly in my view, designated as key workers and – much as I always enjoyed being a retailer myself years ago – I wouldn’t swap jobs with them for a second at the moment. Hard work and vital work in times such as these. The status of the shop floor workers, though, is in my view shielding the retailers (i.e. senior management) themselves from criticism at the moment and that’s not going to prove sustainable.
Bottom-line is that there is a very obvious supply chain management weakness here, as far as I can see, and the images of “panic-buyers” are at times serving as a smokescreen. There is no way that the main supermarkets, who sit on massive stockpiles of the nation’s food, should be experiencing empty shelves quite on the scale they are at present. The food is there, but it is in the wrong place at the wrong time, so we do really need to think about decisions taken by those responsible for supply chain logistics. And when emotive TV reports of key workers unable to buy food go viral, well the quite proper decision to address the problem with the sudden introduction of dedicated shopping hours, rather than phasing them in over a couple of days, simply compounds the problem even further. It’s like a sudden train failure between London and Peterborough causing delays further up the East Coast Mainline, dragging on for days because all the trains end up in the wrong place! Retail success is alwaysa complex equation involving parameters of demand and supply – decisions by both consumer and retailers here are causing the current problems.
So what are the longer-term implications for the supermarkets themselves? We as consumers are quite fickle and remember the negative experiences more readily than the positive ones. Despite being relatively loyal to Sainsbury’s over the years, for instance, I for one won’t forget that they couldn’t offer me a delivery spot for three weeks when Asda (not a retailer i’ve ever bought from online before) could deliver what I needed in just three days. There is likely to be a slight reshuffling of the pack in terms of our supermarket patronage in the longer-term – we have longmemories!
Interestingly, to end on a positive note, one retailer that may weather the storm better than others may be Morrisons. While the other supermarkets blundered into poorly-considered knee-jerk responses and made some supply chain errors as a consequence, they by contrast took a far more strategic approach and took time to reconsider their core businessproposition. Sure, Morrisons suffered from empty shelves and disgruntled customers just like the others, but they also took stock and re-engineered their operations relatively quickly. The convenient food parcels were a pretty neat idea, it has to be said, and the decision to ramp up online operations, both directly and through their partnership with Amazon Prime, is starting to work well because it was backed up by the conversion of around 100 stores into additional distribution points and the recruitment of about 2500 extra drivers and food-pickers. Adjusting for current circumstances, Morrisons’ sales are up around 6% in actual terms and they are doing better than their rivals – let us hope it proves a sustainable strategy too, given the company has not faired well of late in competitive terms.
Why does all this matter? Well, because if there is one key lesson from this crisis – as there always is from any crisis – is that what the UK needs longer term is increased competition!