Supermarkets are delivering to stores less frequently and prioritising the most profitable and easily transported products as they grapple with shortages that are causing alarm among many British businesses.
So far, retailers are able to manage the supply issues, according to executives in the sector.
There is unavailability of some products in some stores on some days, but companies have avoided any impression of across-the-board shortages that could trigger panic buying.
But the constraints are starting to affect a broader range of UK industries, including restaurants, pubs and wholesalers, as well as healthcare and construction groups.
McDonald’s milkshakes became the latest high-profile casualty, as the fast-food chain was forced to cut them and bottled drinks from the menus of its 1,250 UK outlets on Tuesday, citing supply-chain disruption.
Nando’s last week closed 45 stores because of a shortage of chicken, while pub group Greene King has suffered supply issues with some drinks in Scotland, and City Pub Group has run dry of Prosecco. Novikov, an upmarket Asian and Italian restaurant in London, has said it is struggling to source Wagyu beef.
“It’s certainly a lot more difficult,” said Caroline Taylor, Novikov’s general manager. “We are having to be more organised with our suppliers to make sure we get our supplies.”
One seasoned retail executive said: “If you are facing reduced capacity as a retailer the first thing you are going to stop transporting round the country is bottled water. It takes up a lot of space and is very low margin.”
Another former executive in the sector added: “You try to switch off complexity. That’s mostly about reducing slow-selling product lines. And you can stop promotions that spike demand. But these are all quite customer-unfriendly things.”
Big food companies such as the chicken producer 2 Sisters Food Group and Arla, the dairy company, have said that the lack of haulage drivers and manufacturing staff, many of whom came from the EU before Brexit, has hit supply.
Milk & More, the UK’s largest milk delivery service to households and a division of German dairy group Müller, said it was “actively recruiting drivers to mitigate future challenges”, while Nando’s said it had reopened the “vast majority” of its restaurants but about 20 staff per day were still helping out its suppliers.
Demand for products as coronavirus restrictions ease and businesses reopen has exacerbated the problem.
Stock levels in relation to expected sales across the UK retail sector slid to an undersupply of minus 21 per cent this month, the lowest since records began in 1983, a monthly survey conducted by the CBI, the employers’ organisation, showed on Tuesday.
“The danger is that the wrong things get the supply,” said the seasoned retail executive. “Agency drivers usually take up the slack in peak or holiday periods, and at the moment many of them are focused on supplying Amazon for Black Friday and then they’ll move on to supermarkets for Christmas.”
Shortages of materials and labour are also spreading to industries such as healthcare and construction.
A lack of building materials, in particular, could lead to longer-term problems. Shane Vinay, director of SV Roofing, a London-based roofer, said lead times for items such as plyboard and lead tiles had extended from days to three or more months and that prices for products such as wood battens had tripled.
“God knows, this is the most expensive time to do any renovation,” he said.
Such shortages mean that for businesses such as pubs, which have been shut for much of the pandemic, refurbishing or opening new sites has become impossible, according to Clive Watson, executive chair of City Pub Group.
“People are focusing on chicken and milk because it’s topical. The big worry is the staff and the construction bottlenecks,” said Watson. “It has already held up our plans for opening new pubs. We can’t open a new pub [in Swansea] until late September, which means we will totally miss the season.”
Source: Economy - ft.com
