Christmas and more in March – but only for some

Bar Code and Virus

I saw this in a tweet from @inthemoodfortw

On the 31st March, Kantar released their data on the last four weeks of grocery sales and the figures were eye-watering, outperforming Christmas sales and periods. March was the biggest month of grocery sales in the UK ever recorded.

In the four weeks to the end of March, Kantar say that grocery sales were up 20.6% i.e. an additional £10.8bn was spent in this period.  In the four days as COVID-19 lockdown started, some 42m extra trips were made.  There were more people shopping, more often and spending more on each trip.  Throw in some panic-buying, which there also was,and it is no wonder the stores’ supply chains began to creak.

Some of this additional sales was the displacement from cafes, restaurants, coffee shops, Greggs and the like.  Kantar estimate that 503m extra meals (lunches, snacks etc.) are being made at home each week.  The food to do this has come from food retailers. Even if an over-estimate, the scale of this displacement is huge.

Other figures catching the eye are the increase in sales in London of 26%, the highest in the UK.  So it is likely London stores were hit hardest by out-of-stocks, perhaps leading to an over-perception of emptiness in shops (it did happen elsewhere though).  Alcohol sales were up 22% and store cupboard products by 28%.  So there’s a good chance of eating and drinking ourselves immobile with pasta dishes and red wine over the next three months.

All the retailers showed increased sales with Lidl up 17% and Sainsbury (7.4%) performing the best of the ‘big 4’.  Convenience stores (independent and chain) were up 30%, as local became a new standard shop.  Independents also did well during this period.

This Christmas plus sales came almost out of the blue and with little or no preparation for the retailers.  At Christmas there are months of planning and extra stockholding in anticipation of demand.  Here, demand overwhelmed the just-in-time systems of supply.  It is remarkable how ‘quickly’ the adaptations to these systems (at production, distribution and in store) have led to an improved position, aided by the binge-buying slowing.  Just-in-time has its issues – and I’ll return to these again – but it recovered really quite well.

On line retailing has also done well, despite the frustrations at its capacity limits.  Sales through the main players increased, but could have been so much more in a totally elastic system.  Capacity is increasing but demand is still ahead.  At the other end of the scale, smaller specialist retailers, box schemes and the like (and my personal problem, flour mills) have been struggling to cope with their increased demand.  New to online specialist food retailers have sprung up, often where demand from restaurants has dried up, or to collaborate oat a local level.  They too are seeing retail sales at unheard of levels and have in turn often struggled to cope.

As I said over my last two posts, the contrast between food and non-food retail is stark.  For food retailers despite all the pressure, the last month has been better than Christmas (in sales terms if not some other aspects). For many (though not all) non-food retailers the deepest, frozen, winter has arrived, the Beast from the East writ large.

The implications of this bonanza/famine will take some time to understand; something I attempt to begin next time.

Posted in Alcohol, Christmas, Community Grocer, Consumer Change, Convenience stores, Covid19, Data, Food, Food Retailing, Internet shopping, Kantar, Lidl, Local Retailers, Logistics, Non-food retailing, Online Retailing, Panic buying, Restaurants, Retail Change, Retail Sales, Retailers, Sainsbury, Uncategorized | Tagged , , , , , , , , , , , , , , , , , | 2 Comments

Retail Armageddon – Non Food

In my last post, I considered some of the best and worst behaviours we have seen in food retailing during the COVID-19 crisis to date.  Now we have the Government lockdown and the splitting of retailing into essential and non-essential shops, or pretty much food and non-food (whatever Sports Direct thought).

The Government’s announcement and forced closure effectively consolidated much of what was already underway in non-food retailing.  As people began to stay away from many towns and footfall fell, and as consumers transferred their spending to toilet paper and canned and dried goods in food stores, so sales in non-food collapsed.  The thought of – and now reality of – being housebound for weeks is not exactly conducive to clothing, fashion and other sales.  As Next stated “people do not buy a new outfit to stay at home”.

So non-food retailers began to close stores and to think about their futures.  Some are doing the decent thing in response to indications about the Government’s business support package and are keeping on, paying and looked after their employees, at least in the short term.  Others closed stores and basically disposed of their staff.  I can understand the need to close stores as demand collapsed (though some I feel used this as cover) but given the support for the economy underway, simply walking away from people is unforgiveable at this time.

For many of these non-essential non-food stores the decision was made ahead of the Government’s lockdown.  Some though apparently tried forcing employees to work when they did not want to and when it looked unsafe (yes, Waterstones).  Others claimed they were indeed essential (Sports Direct unsurprisingly, and they’re really not).  It really beggars belief in the circumstances.

Some of these non-food retailers will struggle, if they are shut down for an extensive period, to recover their store portfolio and we may well see a major consolidation, accelerating existing trends.  Some will not survive the shutdown.  Smaller non-food retailers will, unlike their food counterparts, be less resistant to the problems caused, despite help on offer. It is a very worrying time for many businesses.

It is possible that more non-food will move online.  For those that had a strong online presence, this may be something of a respite or protection, but it is not a panacea, though does offer a channel to the market (as Next have shown).  But again we may see an acceleration of the pre-existing trend as more retailers move or develop their online offer, and more consumers turn to online shopping. Whether consumers are fully in the mood to buy remains uncertain and highly unlikely though (beyond some specific product areas). It is clothing and fashion that may be most damaged.

We should also spare a thought for suppliers and landlords (yes, I know).  When M&S and Primark cancel their order book you know there is major pain at production as well as at retail.  As stores close or retailers refuse to pay rent so landlords will be hit.  Many retailers want rent relief to go with the rates relief; another kick for the CVA type restructuring and rent holidays seen in recent years. The effects are going to reveberate for a long time and in many dimensions.

A propos the recovery after Covid19, when this is over and you fancy a pint, please reflect on these contrasting approaches:

 

Fullers commit to not charging rent and Wetherspoons pay off their staff with immediate effect and tell them to go and work in Tesco. You pay your money and you take your choice, but there is a price to pay for decency.

Overall, as we said in the previous post, food is under massive stress but in a big (temporary) boom; non-food is something of a disaster zone.  In the next post I try to reflect on what this might mean for the future.

Posted in Amazon, Closure, Consumers, Covid19, CVA, Employment practices, Fashion, Government, Landlords, Online Retailing, Rents, Retail Change, Retailers, Retailing, Shopping Centres, Sports Direct, Suppliers, Uncategorized, Wetherspoons | Tagged , , , , , , , , , , , , | 3 Comments

Retail Armageddon

A couple of weeks ago we were delighted to have Helen Dickenson, Chief Executive of the British Retail Consortium deliver our Retail Futures lecture. Her title, Retail Armageddon or Reinvention? and her presentation were about the retail restructuring underway.

Three weeks later and the world we were discussing has been turned upside down. The last time I saw Helen, she was presenting about a different retail crisis, live on TV, as one of the three speakers at the Prime Minister’s daily National Coronavirus press briefing.

As everyone is all too aware, retailing is in the eye of the Covid19 storm. My last post, on this topic, has stood up reasonably well, but failed totally to predict the scale of panic-buying in grocery stores. Supermarkets have been struggling to cope with the surge in demand and have embarked on a massive temporary hiring spree to try to ensure supply. Supposedly mundane unimportant jobs, such as shelf fillers, have now been reclassified as national key workers.

There are some commentators laying the blame for the empty shelves on the supermarkets’ systems of supply, claiming they have failed to cope with a 10% increase in demand. This figure is wrong, calculated on a smoothed annual figure; demand has shot up by much more than this, with a consensus of c70%.

Sales figs

The fault is not with the supermarkets but with the consumer surge in demand, in a short time and without any warning or planning. Some of this buying is understandable – if you are going to be at home for weeks, then you need suppplies – but some is clearly panic and/or attemmpts at personal profiteering. There seems to be supply of much (not all) product in the system as a whole, but the issue is keeping the shelves supplied and filled. With stores having limited storage space and regular (JIT) supply, the spikes in demand have overwhelmed the processes. If the stores can be resuppplied and consumers act more responsibly then there is not anywhere near the problem people are imagining.

Some sense of order is being developed. The reduced opening hours, the social distancing, special shopping for NHS and other priority groups, additional hiring and capacity building (including restaurant and other operators switching production) will all help. As restaurants, pubs and cafes close though so the out of home trade will decline and add to the pressure on supermarkets. There is much to be done to get supply right, but despite the scenes of empty shelves and long queues, the food retailers, their staff and suppliers are dong a great job in very difficult circumstances.

Another component of the sector – the convenience and independent local stores – also seem to have been playing their part. Supply may have been less of a problem it seems in bits of this sector, but it is the community and local nature of the stores and their owners that has come to the fore. Stories abound of local retailers serving the elederly, vulnerable and so on and supporting a wide range of local initiatives. This localness will become ever more important.

Again though the issue may not be the overall supply of the product, but unpredictable demand. We made it out to our local butchers and fishmongers at the weekend and they told stories of quadrupling of sales and their inability to keep product in the stores. This is not a lack of overall supply, but demand outstripping imagination. How as a local butcher do you imagine and cope for a four fold increase in sales overnight? These are massive osciallations in supply which hopefully will level out in due course.

A final food related thought. Food banks have been going through a tough time and donations are much needed. The Co-operative’s national gesture (amongst lots of great initiatives by a range of retailers on a range of topics) will help, but supporting food banks at this time will be a lifeline for vulnerable people. If you can help, please do.

Coop food share

 

Food retailing has seen the worst and the best of behaviours over this past couple of weeks. It is going through quite a bizarre period and an armageddon from an unexpected origin. What the shape of all this will look like at the end, who knows. We may well find that retailersand policy makers will need to take a hard look at the way we operate our food system in the future. Consumers are unlikely to forget those that help them at this time.

Non-food retailing is another matter though, and I’ll turn to that in a further post.

 

Posted in Community, Community Grocer, Consumers, Cooperative Group, Covid19, Employment, Food Retailing, Local Retailers, Logistics, Opening Hours, Panic buying, Retailers, Retailing, Scottish Retail Consortium, Shopping, Supermarket, Supply Chains, Uncategorized | Tagged , , , , , , , , , , | 3 Comments

Feeding the (Potentially Rather Ill) Nation?

I am not an expert on viruses or their spread and have no knowledge of how/when/if Covid19 will develop in the UK. But I have done some work on retail supply chains and however it develops they are potentially about to be tested in a variety of ways.

On the 2nd March, the Guardian ran a story about the preparations that food retailers were making about keeping the country fed if Covid19 struck really hard.  This was mainly based around one analyst’s note, which predicted empty shelves, panic-buying and food riots. On the 6th March the Government Minister, Matt Hancock said he had been in conversation with food retailers and supply was assured.  Retailers immediately flatly denied any such discussionsSome have introduced their own limitations on purchases, as waves of ‘panic-buying’ appeared.

The UK Government at the time of writing are to announce what powers it will implement over the next month or more to ‘combat’ the virus.  This could include no-go zones and forced curfews and isolation in the worst scenarios; lots of self-isolation and “institutional” closures in others.  It is likely that, however things progress, some people will become very ill and die. We can hope that is a very small number, but even then that personal and human tragedy is the worst of all cases.

Nonetheless, there has to be consideration (by Government and retailers) of how the vast majority (hopefully) are kept alive – and thus supplied with the products they need (medicines for example) and fed. For retailers, many going through tough times, a wide spread of the virus is of course the very last thing they want.  Sick, fearful or isolated customers don’t tend to want to spend and both the ability and desire to buy many products and services will be curtailed. Some products though will receive enhanced demand and panic-buying and warnings of profiteering already abound.  Operationally in the worst case, retail management may themselves fall ill and retailers may have many staff unable or unwilling to work in shops.  This may be the very real threat for supply chains and retailers generally. This is a financial/fiscal crisis for retailers and their workers (as well as the obvious personal health crisis).  Some may not be able to recover without assistance.

So if people can’t/don’t want to go to the shops what happens?  We have a relatively well developed home delivery service in grocery (and non-grocery) and for some sectors of the economy and the population, delivery to your self-isolation ward (home) will be the only/preferred option. For others click and collect may still be an option. However, that of course assumes the goods can be produced, delivered, picked and delivery drivers are available.  The same will be true of home delivery food services such as Just Eat.  Services to some institutions will need to be prioritised e.g. care homes, hospitals etc. But this will not be able to cover the whole population.

Others will venture out to local shops, assuming they can be re-stocked, and in some scenarios these will receive a boost of trade.  But so much depends on the severity and spread of the outbreak, at national and local levels. And at this point there is so much we do not know.

We are already seeing some products run low and empty shelves in lines such as hand gel (and for whatever reason toilet paper).  This is likely to get worse if (as) the virus progresses.  Containment and then delay will provide some breathing space (sorry) for the supply chain to adapt and develop some resilience, but it will be hard.  If production is affected of key products then there will be further problems.  Covid19 is asking serious questions over how we can support and feed ourselves at times of crisis, and we may struggle to find equitable answers. Freeing up some of the restrictions on a temporary basis may help.

If there is delay in the spread and people are reassured that the bulk of products will flow as normally, then there should be no real issue for retail supply chains, except for exceptional products and serving those who are unable/unwilling to venture to stores. Provided that is, that enough employees and managers are available and are not isolated or looking after others. Patterns of behaviour may change but overall there should not be a problem of physical supply.

For retailers, supply chains work best when they are frictionless and/or there are limited fluctuations due to unexpected events.  Volatility and oscillations in demand/supply test reliance of supply.  The way around this is through smoothing mechanisms to even out demand – hence the firm based rationing starting (though this also helps in store).  But, this is neither equitable nor sustainable and a broader national solution will be needed before long, if things progress to major crisis points as in one of the scenarios (see Italy).

For now, this is all speculation, though I am certain detailed scenario and business continuity planning is being undertaken. Time will tell how accurate or effective this is.

 

Posted in Consumers, Covid19, Employees, Employment practices, Food Retailing, Frictionless, Government, Independents, Internet shopping, Local Retailers, Online Retailing, Panic buying, Retail leadership, Retailing, Supply Chains, Uncategorized | Tagged , , , , , , , , , , | 2 Comments

Retail Armageddon or Reinvention?

On the 3rd March, the University of Stirling, the Stirling Management School and the Institute for Retail Studies were very pleased to host the Chief Executive of the British Retail Consortium, Helen Dickinson, OBE.  In front of an audience of retailers, students/staff and government and other policy makers, Helen explored the future landscape of retailing and the hot question of whether retail is facing armageddon or reinvention?

Following her speech and presentation my role was to act as facilitator of a discussion session involving Helen, a panel of retailers and the audience.  The panel comprised Dan Brown (the MD of Lothian Stores and President-Elect of the Scottish Grocers Federation), Gillian Crawford (founder of Lily Blanche and Tartan Twist), Karen Forret (MD of Wilkies) and Colin Temple (MD of Schuh).  In Karen and Dan’s cases it was a return to their old studying grounds, both being graduates of the Marketing and Retail division of the University.

Helen’s presentation set the scene for the discussion.  She began with the ‘perfect storm’ hitting retailing, encapsulated in her view as the rise of technology (internet), ever increasing costs and sluggish consumer demand.  This ‘dark side’ was then counterpointed by the growth (though slowing) of online retailing, the increasing differentiation of physical stores and the retail adaptation to ethical, social and circular consumption.

She concluded with three reasons to believe in the future of retailing:

  • The sector’s strong and important economic contribution and innovation;
  • The scale of the retail sector in terms of jobs/careers and the changing/broadening skills needs;
  • That retailing supports communities, driving social and environmental change.

For Helen and the BRC, the fly in the ointment for the future was the need for governments to sort out their view of, and their support for retailing. This was framed as focusing and clarifying policy on sustainability, crime, rates, apprenticeships and Brexit.

The presentation gave the audience plenty of cues for discussion and the panel and the audience ranged widely over various topics for the next hour.  Key themes included the development of the circular economy, the need to develop e-commerce more strongly and the types of skills University graduates need to get jobs in retailing.  We never got to some issues (including Brexit and COVID-19) and my attempts to replace some rates by a digital tax were rebuffed by the Panel.  That is perhaps one for another day.

Retailing is changing, it often has.  We are over-stored and there is a change in structure and scope.  But, the media narrative of ‘death’ is well off the mark and the Panel were clear about it being Reinvention not Armageddon.  The examples they used to describe innovation and reinvention demonstrated the dynamism and growth in parts of the sector.  Many good things are going on and need to be showcased not hidden. There are reasons to be cheerful during this reinvention.

Photography by Whyler Photos of Stirling www.whylerphotos.com - 01786 474340

Some of the speakers looking reasonably cheerful about retailing – L-R Professor Leigh Sparks (University of Stirling), Karen Forret (MD, Wilkies), Colin Temple (MD, schuh), Dan Brown (MD Lothian Stores and President-Elect, Scottish Grocers Federation) and Helen Dickinson, OBE (Chief Executive, British Retail Consortium)

 

 

 

Posted in Accounting, BRC, Brexit, Consumer Change, Employees, Government, Institute for Retail Studies, Internet shopping, Legislation, Local Retailers, Online Retailing, Rates, Regeneration, Regulation, Reinvention, Retail brands, Retail Change, Retail Policy, Scottish Government, Scottish Grocers Federation, Scottish Retailing, Small Shops, Technology, Uncategorized, University of Stirling | Tagged , , , , , , , , , , , , , , , , , , | 4 Comments

Making Hospital Shops Healthier

Over the last seven or so years, for a variety of personal reasons, I have seen more of the insides of hospitals than I have wanted to.  I am not alone in this at my life stage of course.  Those visits have lead me to pay attention to the retail outlets in hospitals in Scotland and Wales.  Together with the wall of smokers outside the doors, the retail outlets often add a sense of unhealthiness to hospitals – and that’s before the perennial issues about patient food.  They retail foods high in saturated fats, salt and sugar in the main.

In Scotland there have a sequence of public health measures aimed at population level impacts.  Some of these began controversially, but have come to be seen as world-leading and pioneering (e.g. the smoking ban).  Others have had a long legal fight to implementation (e.g. minimum unit pricing of alcohol) and major research on effects is underway.  Forced changes to retail alcohol promotions and hours of sale and tobacco displays all have added to a sense of purpose/control (depending on your view).

A little under the radar, but in my view, very important and interesting has been the attempt in Scotland to improve the healthiness of retail stores in Scottish hospitals.  As indicated earlier, it does seem crazy that places that are meant to make people better, are often promoting the very products that made them ill in the first place (in some cases) or which don’t help people lead healthy lives or behaviours. The choices available to hospital staff also can cause issues.

The Scottish Healthcare Retail Standard (HRS) was introduced in 2015, comprising a set of mandatory requirements for retail outlets in NHS healthcare premises in Scotland.  HRS required that a substantial and specified proportion of food and drinks on sale must meet nutritional criteria and that only products meeting nutritional criteria could be promoted.  This is not a ban but a rebalancing of the offer in store and its promotion.  Full implementation came in March 2017 after a run-in period to allow changes.

20170528_233059

The University of Stirling (Institute for Social Marketing colleagues and myself), ScotCen Edinburgh and the University of Dundee were involved in the evaluation of the implementation of HRS; the overall NHS Health Scotland report is available here.  We have just had published a more detailed paper examining retailers’ experiences of the implementation of HRS and its impact on food and drink product ranges and promotions (so details at end of post).

We find that implementation was in some cases challenging but in all cases was achieved.  There was a rebalancing of the product range and of promotions.  Demand for healthier products rose above prior expectations.  Some issues of supply were initially found, but overcome.  HRS did act to stimulate supply, retailer and consumer change, add to the healthier choices available and reduce unhealthier options.  A new baseline was set for expectations.  Retailers could have benefitted from clearer support and consistency at an early stage of implementation, but all achieved the standard demanded.

The HRS and this paper are important, both in healthcare settings and more widely.  As we have argued before, the retail in-store landscape is not neutral and retailers can and do act as social engineers.  As discussions ramp up about policies to better develop healthy lifestyles, so schemes such as HRS may have lessons for the wider retail sector and its behaviours as well as for healthcare sites elsewhere than Scotland. How do we utilise the influence and power of retailers to reduce harm? HRS may be one method worth thinking about.

Details of the Paper and its Availability

Stead M, Eadie D, McKell J, Sparks L, MacGregor A and AS Anderson (2020) Making hospital shops healthier: evaluating the implementation of a mandatory standard for limiting food products and promotions in hospital retail outlets.  BMC Public Health, 20:132

Paper available here: https://doi.org/10.1186/s12889-020-8242-7

Posted in Alcohol, Behavioural Economics, Consumer Lifestyle, Diet and Health, Food Retailing, Food Standards Scotland, Government, Health, Healthcare Retail Standard, Healthy Living, Hospital, Hospital Shops, Institute for Retail Studies, NHS Health Scotland, Promotion, Public Health lev, Regulation, Research, Retailers, Scottish Government, Scottish Grocers Federation, Tobacco, Uncategorized, University of Stirling, Well being | Tagged , , , , , , , , , , , , | 1 Comment

Shopping Centres and Town Centres in Scotland

The significance of shopping centres across Scotland is undeniable and has been the subject of interest for Scotland’s Towns Partnership (with REVO and DWF LLP), as this blog has noted before.  Last week the same partners brought together a range of public and private interests (shopping centre companies/managers/experts, COSLA and local authorities, the SNIB and Scottish Enterprise) to try to take the agenda for change forward.  We were also lucky enough to get an hour of the Cabinet Secretary Aileen Campbell’s attendance and engagement, signifying Government’s interest in the subject.

Revo DWF

Amongst various scene setting presentations/provocations, Stuart Moncur, National Head of Retail Savills, set out the state of the shopping centre industry.  He pointed to over 100 identifiable centres in Scotland, but noted that most had been developed before 2000.  Since then growth had been slow, with St James’ the exception not the future.  The point being made is that the shopping centres we have were built for a very different time, tended to be of particular forms and were now often somewhat diminished assets.  Across Scotland, as in retail generally, we have too much space, not doing what is needed.  In some Scottish towns we have two centres where only one is needed.

This reality is a known one, so the issue is the barriers and opportunities to get collaboration to repurpose, downsize and re-energise these centres, so they perform for the town as a whole.  Debate on this from the audience came at the issue from different angles, but despite some superficial tension, in reality public and private sectors are after the same thing; a re-energised successful town centre.

Each circumstance is different and towns and centres are in different situations across the country.  This makes it critical that local engagement, planning, collaboration and funding is developed; national schemes don’t help here.  These local engagements are the lasting outcomes of this STP work and will hopefully lead to some exciting repurposing.

A similar topic was pursued in an evening session arranged by REVO.  Here, I was on a panel with Phil Lawrence, Executive Director of Place Edinburgh City Council, Emma Mackenzie (Head of Asset Management, New River and Phil Prentice (STP).  Emma had also presented on New River’s approach at the earlier session.

Others can better assess the panel session as a whole and any contribution I made, but it was interesting and enjoyable listening to Paul’s reasons and hopes for Edinburgh and having the chance to think more long-term about some of the changes we will need to make to property and behaviours if we are to achieve our carbon neutrality targets.  Such changes will provide an existential threat to some activities in some places and the sooner we start moving on this the better.  For towns this is a real opportunity.  For shopping centres in towns, owners and managers need to focus on how the centre (in whatever future form) can help the town as a whole – enhancing social value rather than pursuing only extractive economic value.

Posted in Consumer Change, Edinburgh, Government, Local Authorities, Malls, Paisley, Places, Regeneration, Reinvention, Retail Change, Retailers, Scotland's Town and High Streets, Scotland's Towns Partnership, Scottish Government, Scottish Retailing, Shopping Centres, SNIB, Social value, Town Centres, Towns, Uncategorized, Urban, Vacancies | Tagged , , , , , , , , , , , | Leave a comment