Industry Adaptation Measures

In the UK the official lockdown due to Covid-19 started in the evening of March 23. However, the UK government and UK retailers had started taking a range of measures to help with higher consumer demands some days before.

March 20th: DEFRA relaxed competitions laws so that supermarkets could work together to feed the nation. Laws around drivers’ hours were also relaxed and the bag charge for online purchases was wavered.

Roughly in order of appearance, these are the most important changes introduced by UK retailers in response to the developing situation:

• Restricting the number of specific grocery items that could be purchased, such as toilet paper, soap, UHT milk, eggs, frozen food, rice and pasta.

• Temporarily closing the in-store cafes and fresh food counters.

• Introducing dedicated shopping hours for elderly and most vulnerable categories of people.

• Reducing the opening hours to allow more time to re-stock.

• Reducing product ranges to ensure there are more key staples such as milk, bread, eggs and meat available.

• Expanding the “click and collect” service and maximise online food delivery availability. For example, Tesco have hired 7,500 van drivers and product pickers and increased their delivery slots. Similarly, Sainsbury’s increased from 370,000 online grocery slots to 600,000 slots for home delivery and click and collect within three weeks.

• Installing protective plastic screens and floor markers at checkouts to encourage social distancing, and to protect colleagues and customers. Introducing hand sanitisers and cleaning stations for trolleys and baskets.

• Limiting the number of people inside the shops at any one time using a staggered entry system and only allowing one adult per household into stores.

Other measures from the British Retail Consortium (BRC) and UK Finance included increasing contactless card payment limits from £30 to £45 from April 1st.

Several retailers have also donated and distributed large volumes of food to the nation’s food banks. This is because it is estimated that the outbreak of Covid-19 has led to a 40% reduction in donations to community food banks across the country, when most are experiencing soaring demand for their services.

Just 10 days after the first peak in demand, many retailers started to ease limits on most products in store.

You can follow the BRC daily updates on retailer announcements here.

But why is the shortage happening in the first place?

Supermarkets are used to planning months in advance for seasonal events like Christmas, when people buy more than they typically would at other times of the year. Retailers are prepared for these expected surges in demand. However, Covid-19 led to an unexpected surge in demand and as a consequence to supply issues.

Why don’t supermarkets hold more stock in reserve?

If supermarkets have a lot of stock, then the price of products that consumers buy usually goes up. This is one of the reasons why stock in local supermarkets is sometimes more expensive than at larger branches.

Tesco, for example, was the first retailer able to cut its prices during a period of economic downturn in 1977 when consumers were shopping less because it moved to a just-in-time delivery model, the same one that all of the major supermarkets use for many of their products today.

Just-in-time consists in supermarkets ordering in stock into their stores on a daily basis, based on the level of demand in each individual store. In normal circumstances, the just-in-time supply chain system is incredibly efficient as it saves consumers and retailers money. However, with panic buying the massive increase in demands results in capacity constraints.

Nevertheless, this does not mean the supply chain has broken down. Production is continuing in the background to provide enough food to feed the population provided people continue to shop responsibly and not but unnecessary and unpredictable strain on the food sector.

We will discuss the impact of panic buying and the role of the consumer in more detail in the next section of the course.

What we would like you to do

Please share your thoughts on your experience of the supermarkets in your region?

• What measures are retailers in your country taking?
• Are there many empty shelves in your supermarket?
• Are you concerned about the continued supply and availability of food?