UK retail industry update
Sign up for myFT Daily Digest and be the first to learn about the news of the UK retail industry.
Supermarkets are reducing the frequency of deliveries to stores and prioritizing products that are most profitable and easy to transport, as they are struggling to solve the shortage that has caused many British companies to be alarmed.
According to industry executives, so far, retailers have been able to solve supply problems.
Certain products in certain stores are sometimes out of stock, but the company avoids any impression of a total shortage that could trigger panic buying.
But these restrictions are beginning to affect the wider UK industry, including restaurants, bars and wholesalers, as well as healthcare and construction groups.
McDonald’s milkshakes are the latest high-profile victim as the fast-food chain was forced to reduce milkshakes and bottled beverages from the menus of its 1,250 UK branches on Tuesday due to a supply chain disruption.
Nando’s last week Closing 45 stores Due to the chicken shortage, the bar group Greene King encountered some beverage supply problems in Scotland, and the City Pub Group has run out of Prosecco. Novikov, a high-end Asian and Italian restaurant in London, said it is working hard to source Wagyu beef.
“This is of course much more difficult,” said Caroline Taylor, Novikov’s general manager. “We have to be more organized with suppliers to ensure we get supplies.”
An experienced retail executive said: “As a retailer, if you face the problem of reduced capacity, the first thing you will stop shipping nationwide is bottled water. It takes up a lot of space and has very low profit margins. .”
Another former executive in the industry added: “You are trying to shut down complexity. This is mainly to reduce unsalable product lines. You can stop promotional activities that stimulate demand. But these are very unfriendly things to customers. “
Large food companies such as chicken producer 2 Sisters Food Group and dairy company Arla said the lack of transport drivers and manufacturing staff (many of whom were from the EU before Brexit) has already hit supply.
Milk & More, the largest home milk delivery service company in the UK and a division of German dairy group Müller, said it is “actively recruiting drivers to meet future challenges”, while Nando’s said it has reopened “most” restaurants , But about 20 employees are still helping its suppliers every day.
With the relaxation of coronavirus restrictions and the reopening of businesses, demand for products has exacerbated this problem.
A monthly survey conducted by the employer organization CBI on Tuesday showed that the UK retail industry’s inventory levels related to expected sales fell to minus 21% of undersupply this month, the lowest level since records began in 1983.
“The danger is that the wrong things are supplied,” said the experienced retail executive. “Agent drivers usually fill vacancies during peak periods or during holidays. Many of them are currently focused on supplying Amazon for Black Friday, and then they will move to the supermarket for Christmas.”
Material and labor shortages have also spread to industries such as healthcare and construction.
In particular, the lack of building materials may lead to longer-term problems. Shane Vinay, director of London-based roofer SV Roofing, said the delivery time for items such as plywood and lead tiles has been extended from a few days to three months or more, while the prices of products such as wood strips have tripled .
“God knows, this is the most expensive time for any renovation,” he said.
Clive Watson, Executive Chairman of City Pub Group, said that this shortage means that for businesses such as bars that have been closed for most of the pandemic, it becomes impossible to renovate or open new venues. .
“People are concerned about chicken and milk because it is very popular. The biggest concern is staff and construction bottlenecks,” Watson said. “It has hindered our plans to open a new bar. We cannot open a new bar [in Swansea] Until the end of September, this means that we will completely miss this season. “