Keeping the Supermarket Shelves Stocked

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THREE
Keeping the Supermarket
Shelves Stocked
In this chapter, we put the supermarkets under the spotlight,
asking what worked and what didn’t. Were shortages, and there
were some empty shelves at times, a result of so- called panic
buying, supply issues further up the food chain or the retailers’
own logistical issues? We answer such questions with examples,
such as the flour shortage. And we look at the decisions taken
by retailers on what to stock and how the ‘just- in- time system’
(JIT) was adapted. On 2 March 2020, UK supermarkets drew
up contingency plans to ‘feed the nation’ (Jolly and Smithers,
2020). Core to the plan was the decision to work closely with
suppliers to scale back the range of groceries available and focus
on maintaining supplies of staple products. City analyst Bruno
Monteyne, formerly a supply chain director at Tesco, wrote in
a note to investors: ‘Yes, it will be chaotic (and expect pictures
of empty shelves), but the industry will reduce complexity to
keep the country fed’ (Jolly and Smithers, 2020). He pointed
to the fact that Tesco had previously practised ‘multiday
simulation’ exercises, including mocked- up news coverage,
with teams preparing responses to a flu pandemic. On 15 March
the supermarkets issued a joint ‘Feed the nation’ statement in
an attempt to reassure the public and discourage panic buying
(Times Series, 2020).
Without a doubt, the most immediate and compelling
of the food stories associated with the pandemic surrounds
supermarkets and the images of empty shelves that emerged
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early in the first lockdown, although in the event there were
few, if any, long- term shortages. And where there were shorter-
term supply issues the reasons were highly varied with no
one single causal factor. So in the first part of this chapter,
we look at some examples of food products that provided
particular challenges to the retailers, finding that many of the
diculties lay further back in the food chain in manufacturing
and processing. Indeed, for this reason much of this chapter is
not directly about supermarkets but about their supply chains.
Shelves are stocked if the food products arrive, and this chapter
looks at the way in which that happens.
Beyond issues regarding particular products, retailers faced
the overriding challenge of increasing volumes for sale as a
result of the collapse of the hospitality sector, as well as dealing
with a wide range of logistical challenges to the prevailing
JIT system, and, later in the chapter, we look in more detail
at this generic issue. But first, let’s look ‘up stream’ at the
processes that are essential to getting food on supermarket
shelves. It has become commonplace to characterise all that
happens between the farm and the supermarket shelves
as the ‘hidden middle’ of the food supply chain, a black
box of primary and secondary processors, packagers and
manufacturers, distributors and wholesalers. The Federation
of Wholesale Distributors (FWD) describes the ‘hidden world
of wholesale’ as ‘the biggest industry you’ve never heard of’
(FWD, no date). Most of us might see big lorries on the road
or even glimpse large warehouses from a car window, but we
rarely see inside these places, still less understand how they
work. If the pandemic began to shine a light on this critical
and often underappreciated part of the food system, it did
so for just a short while, and it remains the case that there
are relatively few academic studies of the ‘hidden middle’,
and those that exist tend to focus on food supply chains in
developing economies (for example, Reardon et al, 2021). For
this chapter, we pieced together information from industry
reports, market analysis, newspaper and magazine articles,
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commentaries, and blogs and we benefitted from the insights
of our Expert Panel.
Look back to Figure 1.1 in the first chapter where we
attempted to illustrate the complexities of the supply chain for
a loaf of bread. An obvious message to infer from that diagram
is that every food commodity is dierent. The constituent
parts of a loaf of bread are not the same as for a piece of frozen
fish, nor are the requirements for packaging, storage and food
safety; and shelf life will vary from product to product. We start
with bread and with flour more generally, not least because
the so- called flour shortage was one of the headline issues in
the first weeks of the pandemic.
Bread and flour
On the face of it, flour, and flour- based products, should have
been very secure. If kept dry, at a relatively even temperature,
with the correct light levels and free from infestation by pests,
cereal grains can be stored for up to 30 years and still be suitable
for human consumption. Wheat is harvested once a year and
is stored to be released onto the market at need during the
following 12 months or longer. Most wheat is harvested in
August so there was no question in March 2020 of getting to
the end of the previous season’s grain stores. Moreover, over
the past 40 years or so the UK milling sector’s use of UK
grown wheat has virtually doubled and by 2018– 19, 85 per
cent of the wheat used by UK flour millers was domestically
produced with the rest coming mainly from Canada, Germany
France and the USA (UK Flour Millers, 2023). There were no
particular fears that this trade would be disrupted nor that the
UK flour milling industry’s processing capacity of 5 million
tonnes of flour per year would be compromised. There was
some alarm at relatively low stock levels of flour held by mills
and customers as a result of the UK flour supply chain operating
a JIT system with typically just a few days’ worth of wheat/
flour in the system at any given moment. While it has become
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common to decry the JIT logic, it makes sense for a product
like flour, which requires more exacting and costly standards
for storage than the grain from which it is produced, which
was not in short supply. A COVID- 19 outbreak serious enough
to close down one or more large mills meant the sector was
potentially vulnerable to some supply- side disruption.
Around two- thirds (66 per cent) of UK flour production is
supplied to bakeries to make bread. The vast majority (85 per
cent by volume) of bread in the UK is produced by what are
termed large plant bakeries. According to the UK Federation
of Bakers (FOB), supermarket in- store bakeries account for
12 per cent of bread production, while small craft or artisan
bakers make up 3 per cent of the supply (FOB, no date). In the
case of bread, there was concern about potential disruption to
the supply of fortificants and other ingredients from overseas,
such as folic acid, with Switzerland, the US and China as
key exporters. In the event, there were few reports, if any, of
shortages of bread for sale in supermarkets. Bread that might
previously have found an outlet in the hospitality sector, such
as sandwich bars, was diverted to retailers as demand increased.
This presented logistical challenges with the need for changes
to contracts or amended transport routes. By mid- March
however, it was becoming increasingly apparent that COVID-
19’s impact on the flour sector was not going to be felt, first
and foremost, on the supply- side, but on the demand- side as
the usual patterns and structures of demand were disrupted.
Overall demand for flour across 2020 remained fairly flat, but
this consistency hid a huge reduction in demand for flour
from the ‘out- of- home’ sector, particularly hospitality, and
an unprecedented increase in demand for flour, from the ‘in-
home’ retail sector (Lawford, 2020). The supermarkets took
most of these challenges in their stride and bread remained
available on the shelves, though there was a decline in in- store
bakery products in favour of wrapped products.
However, flour production is about more than just bread.
Like many industries, in recent years the flour milling industry
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has continued to consolidate. There are now 32 companies
operating 51 mills, with the four largest accounting for around
65 per cent of UK flour production (UK Flour Millers, no
date B). Many of the smaller millers have developed niches
ranging from pre- packed flours to those for specific uses such
as for speciality breads. About one- third of the 5 million
tonnes of flour produced each year is destined for markets
other than bread. About 11 per cent goes to biscuit making,
7 per cent is exported, 4 per cent gets packed into 1.5 kg
bags stacked on supermarket shelves and sold as household
flour, 2 per cent goes to cake making, and 10 per cent goes
to make up a key ingredient of a huge and diverse range of
other foodstus, including catering size large packs of flour
for both the hospitality sector and food products (UK Flour
Millers, 2023). In fact, incredibly, around one- third of all
grocery products on supermarket shelves contain wheat flour,
with the industry producing more than 400 dierent types of
flour to meet increasingly specific customer demands. And as
with bread, the cakes, biscuits and other flour- based foodstus
largely stayed available on the supermarket shelves.
There was one exception to this positive outcome and that
was with regards to the 4 per cent of flour going into 1.5 kg
bags where demand outstripped supply. So why was flour in
short supply on supermarket shelves? Mainly because of the
pace of the change in demand that took place and the logistical
challenges this posed. Retail flour sales had already increased in
advance of Lockdown 1 in March 2020 when, alongside loo
rolls and pasta, it was one of the main products associated with
pre- lockdown ‘panic buying’. Retail flour sales were up by 46
per cent in the four weeks immediately prior to the first UK
lockdown compared to the same period in 2019 (O’Connell
et al, 2020). This trend accelerated once the lockdown kicked
in. With restaurants and cafés closed and people confined to
their homes, there was a boom in home baking, which led to
an estimated five to tenfold increase in demand for flour for
home cooking (ITV News, 2020). Some supermarkets started
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rationing flour and online sales from artisan millers rocketed.
But at the same time the demand for flour in the catering
sector declined rapidly. So the overall demand for flour scarcely
changed but the size of bags it was supplied in did. And this was
the heart of the problem, which was not about the supply of
milling wheat nor milling capacity but packaging capacity and
bag size. The UK produces around 90,000 tonnes of standard
flour each week, but only 12 of the 50 mills in the country
are geared towards retail direct to consumers, in other words
have the machinery in place to pack into small bags. Most
mills supply bakeries and wholesalers with flour in tankers or
in large sacks, typically 16 kg, whereas the supermarkets and
shops characteristically sell flour in 1.5 kg bags. Packing flour
into smaller bags, however, requires specialist equipment and
takes much longer, and any change in packaging required
careful attention to fire risk as flour dust has explosive qualities
in certain conditions. Just locating a supply of bags, as so many
more were required, could prove challenging. Emily Munsey,
Director of Wessex Mill, told us that at one point she had to
find 100,000 1.5 kg bags at two days’ notice:
Before the pandemic all our 1.5 kg bags came from Italy,
which wasn’t going to happen during the pandemic, so
I sourced 100,000 from elsewhere. … We normally use
100 g specialist bags, but we couldn’t get them, so I had
to buy 80 g ones from two alternative companies, that
we’ve never bought from before.
So while there was plenty of grain and flour available in the
UK, millers could not pack it into small bags quick enough to
satisfy the increased demand. Despite a number of COVID-
19- related production challenges related to requirements to
establish social distancing restrictions, such as a shortage of
specialist milling PPE (personal protective equipment), and self-
isolation- related labour issues, impressively, the milling industry
did manage to double production from 2 million bags a week
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to 4 million with many mills operating 24 hours a day, seven
days a week. Some millers invested in specialist small bagging
machinery, while others sought to sell direct to the consumer.
The National Association of British and Irish Millers (NABIM,
now known as UK Flour Millers) developed an online ‘Where
can I buy flour?’ map (UK Flour Millers, no date C), which
included a map to direct home- baking consumers to outlets
(mills, local bakeries, wholesalers) where they could purchase
commercial- sized bags of flour.
Despite this industry- wide eort, UK flour production was
insucient to meet retail demand. At the beginning of April
2020, Alex Waugh, NABIM Director advised that there was
only capacity for 15 per cent of households to buy a bag of
flour per week (Nicholas, 2020); by June the situation was
hardly any better (Perkins, 2020). By mid- summer 2020, as
Lockdown 1 restrictions began to ease, and the hospitality
sector began to reopen, retail demand for flour fell back from
its spring peak. Nevertheless, demand remained significantly
higher than it had been the previous year and many mills
continued to operate at increased capacity by running retail
packing lines 24/ 7. By the autumn, with some restrictions
re- imposed, and a second lockdown on the horizon, and the
return of the TV programme The Great British Bake- O, there
were fears of a second episode of panic buying and shoppers
emptying supermarket shelves of 1.5 kg bags of flour. Keen
to avoid a second run on flour, NABIM issued a statement
reassuring the public that mills were reporting satisfactory
wheat stocks, flour stocks, packaging and labour, and urging
them to buy flour only as they needed it (UK Flour Millers,
2020). The plea appeared to work.
An aside on packaging
Packaging issues were not limited to the milling industry, with
the demand for food packaging material as a result of a general
increase in grocery sales, a specific increase in online sales and
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a requirement for additional ‘protective’ packaging, leading to
packaging supply shortages across many sectors. Packaging is
not easily repurposed from one product to another as it is often
pre- printed with specific product information and ingredient
lists, which means that it cannot be used for other products.
And just a single ingredient substitution due to sourcing issue
means that the original packaging becomes unlawful and
therefore unusable. The result of this was a reduction in food
product ranges in supermarkets during Lockdown 1, again
not because of a food shortage per se but because processors
concentrated on supplying products they were confident they
could get packaging for. In addition, COVID- 19 hygiene
concerns helped to reverse, at least for a while, the move against
plastic packaging in the pre- pandemic period. Susan Hansen,
global strategist for supply chains at Rabobank, for example,
was quoted in The Grocer suggesting that there had been a
‘sea change in public attitude’ where, having gone from ‘hero
to villain’ in the past decade, plastic packaging had returned
to hero status again during the coronavirus pandemic (Nott,
2020a). Descriptions of food packaging as heroic may have
been overstating it a bit but research certainly suggests that
consumers became more positive about plastic packaging as
the pandemic unfolded. In April 2020, for example, 35 per
cent of consumers stated that their attitudes had changed as a
result of COVID- 19, a figure that increased to 43 per cent by
July. Of these consumers, 68 per cent stated that they had a
more positive perception of food packaging, while 54 per cent
felt packaging kept their food safe (Packaging News, 2020).
A similar figure was reported in another consumer attitudes
survey by The Grocer magazine, which found that just under 50
per cent of respondents thought some form of food packaging
was safer than no packaging, although a separate survey for The
Grocer magazine found that sustainability concerns had actually
increased since the pandemic, with 36 per cent reporting that
sustainable packaging had actually become more important to
them (Weinbren, 2020). This is backed up by other surveys. For
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example, DS Smith, a leading supplier of sustainable packaging
solutions, partnered with Ipsos MORI to survey if/ how public
attitudes to sustainable packaging had changed during the
pandemic. In total, 9,000 adults were interviewed online, across
12 European countries, between 24 September and 19 October
2020 – sustainable packaging still mattered to consumers with
a willingness to take positive action on sustainable packaging
increasing from 59 per cent pre- pandemic to 64 per cent.
Hygiene concerns had also increased with 48 per cent of UK
respondents agreeing with the statement ‘Since the COVID-
19 pandemic, I prioritise hygiene over sustainability when it
comes to packaging’ (DS Smith/ Ipsos, no date). A significant
proportion of respondents (19 per cent in the UK) avoided the
purchase of loose unpackaged items such as fruit and veg (DS
Smith/ Ipsos, no date). Specialist grocer Planet Organic and
recycling charity WRAP both reported concerns that customer
anxiety over the virus had stifled eorts to reduce packaging in
the grocery sector (Saker- Clark, 2021). Reconciling consumer
desire for sustainable packaging and hygiene, alongside the
surge in home deliveries, led to massively increased demand
for cardboard, which was likened by some in 2021 to ‘beige
gold’ (Swiftpak, 2021) with demand, for a while, exceeding
the capacity of paper mills.
The case of meat processing
We turn now to some other products and move away from
packaging to processing with a detailed look at the meat
sector where COVID- 19’s initial impact was complex and far
reaching. Meat processing starts in abattoirs where animals
are slaughtered and is likely to continue in separate meat
butchery plants where primary processing takes place. From
these premises, some meat goes straight to retail outlets, such
as supermarkets, in the form of cuts of meat sold for home
cooking such as joints, chops, mince and so on. But many
meat products are processed at yet further facilities for the
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manufacture of a wide range of products from sausages, pies and
pasties to ready- made meals. All these processing plants faced
potential reduced stang levels as a direct result of COVID-
19 absenteeism, problems compounded by the two- metre
distancing requirements creating real challenges on processing
lines. There were some publicized closures of plants due to
COVID- 19 outbreaks linked to transmission within processing
plants. A BBC News article suggested that meat- processing
workers were especially vulnerable to the virus because of the
cold and damp working environment enabling dispersion of
droplets, noisy machinery requiring people to talk more loudly
or shout, and diculties in social distancing when working
on fast- moving production lines (Reuben, 2020). Socio-
economic factors were also cited, for instance challenges of
communicating information about social distancing and safe
working practices to some of the meat- processing sector’s large
migrant workforce. For the trade union Unite, however, it was
not migrant workers’ lack of English language skills that posed
a significant risk factor for coronavirus transmission but rather
their treatment in meat processing factories that did not provide
sta needing to self- isolate with company sick pay or any
other form of financial support, clearly increasing the danger
of individuals with COVID- 19 going into work because they
could not aord to take time o (Unite, 2020). However, the
Expert Panel for our research project, with some leading meat
industry experts, oered a dierent view suggesting that the
majority of COVID- 19 outbreaks were community- based,
and that processing plant- based incidences, contrary to the
impression given by the media, were in fact extremely low.
Given that the supermarkets reported few supply problems, this
rings true. Moreover, as with the flour story, many processing
plants made significant capital investments to mitigate the risks
posed by COVID- 19 and to protect sta, the business and the
larger meat supply chain.
As with flour, the most significant impact was felt through
changes in the structure of the market, and in the case of meat
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this was more complex than flour packaging. In terms of
market outlets, meat is a highly segmented product as already
indicated in Chapter Two because of the carcase imbalance
issue. In the early weeks of the pandemic the demand for prime
cuts like steak and hindquarter plummeted as restaurants ceased
to trade, which also had a negative impact on demand for oal
and other by- products, with uncertainties over exports also
playing a part. In the supermarkets, there was a rapid rise in
demand for simple meat products, seen by some as ‘comfort’
foods, such as mince and sausages. Moreover, consumers also
sought to reduce the number of visits to supermarkets and
bought more than usual when they did brave the queues and
the risk of infection, stocking up fridges and freezers. Either
that, or they sought home deliveries, which escalated rapidly
during the opening weeks of the pandemic. This change in
the nature of demand posed challenges across the food chain.
The supermarkets had to ensure regular supplies and reorganize
store space and increase delivery capacity. The fact that they did
so was a logistical triumph. In some instances, reorganization
involved the closure of supermarket meat counters, but this
was a process that had begun prior to COVID- 19 with the
pandemic providing an opportunity to expedite existing plans
to close in- store fresh food counters (particularly meat and
fish) (AHDB, 2020a; White, 2020). Most major supermarket
chains responded to the pandemic by oering home- delivered
food boxes with Morrisons oering a dedicated meat box
filled with enough meat for over 38 meals and costing £45
including delivery (Morrisons, no date). It contained a 5.7 kg
selection of fresh meat and included a gammon joint, a beef
roasting joint, a pack of chicken fillets, four Best Scotch beef
burgers, 25 meatballs, 10 sausages, a pack of 12 per cent fat
beef mince, a pack of pork loin steaks, two sirloin steaks and
a sachet of fresh peppercorn sauce.
While the supermarkets worked hard to cater for demand,
some sought to shift demand to address the carcase imbalance
issue. The agricultural levy boards initiated the ‘Make it Steak’
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and ‘Make it Pulled Pork’ campaigns in April 2020 and ‘Make
it with Lamb’ in July, encouraging people to cook for their
own ‘restaurant experience’ at home. AHDB’s research on
‘Make it Steak’ showed that an additional 750 tonnes of steak
were sold as a direct result of the campaign with 432,000 new
buyers, and every £1 invested in the campaign giving rise to
£12.30 in retail sales (AHDB, no date). The fine weather of
the spring of 2020 and the reasonable summer that followed
encouraged a good barbeque season. So it was that meat sales
in supermarkets, beyond the continuing strength of mince and
sausages, began to pick up. This, coupled with the gradual re-
opening of hospitality outlets in the summer of 2020 and the
government’s ‘Eat Out to Help Out’ initiative, led to meat sales
rebounding strongly. For the 12- week period up to 9 August
2020, for example, retail beef sales were up 19.3 per cent by
value and 16.2 per cent by volume in the same period in 2019
(Meat Management, 2020). Although the growth in beef sales
eased by −6 per cent in 2021 compared to 2020, the level of
retail sales at the end of 2021 were still + 4 per cent higher than
pre- pandemic levels (AHDB, 2022). But all this changed in
2022, with volumes down 9.0 per cent year- on- year (AHDB,
2022). Pork and lamb sales followed a similar trajectory. Pork
sales were up by 13 per cent in the 24 weeks ending 9 August
(AHDB, 2020c), and in the 12 weeks to 4 October, lamb retail
sales by volume were up 11 per cent compared with the same
period in 2019 (AHDB, 2020b). Like beef, pork sales declined
in 2022, 5.5 per cent year on year (AHDB, 2023b) and lamb
by 9.9 per cent (AHDB, 2023a).
Despite the early carcase balance crisis and the challenges
associated with making plants safe and COVID- 19 compliant,
2020 turned out to be a fairly good year for many in the meat
supply chain with a rise in both retail sales and farm gate prices.
Lamb finished the year, for example, with UK retail sales up
4 per cent on 2019, pig meat was up 8 per cent, and beef, an
impressive 11 per cent (Smail, 2021). Of course, not all of this
increase in retail sales can be accounted for by the supermarkets.
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High street butchers and those farmers making direct sales to
consumers also benefitted, and we have more on this in the
next chapter. But the supermarkets certainly responded too.
Distribution, warehousing and wholesale
As well as contending with the challenges of processing
alongside shifts in the demand patterns of consumers, the
supermarkets also had to confront the challenges associated
with distribution and wholesale. Again, we find ourselves
putting the lens on a part of the food system far less visible
than the supermarkets themselves. Depending on the product
in question, retailers rely on either warehouses to store their
own products or wholesalers to source products. In either
case they need distribution from warehouses to retail outlets
usually by lorry.
As with manufacture and packaging, the immediate onset of
COVID- 19 lockdowns led to demand- side shocks related to
consumer behaviour and the supply- side shocks arising from
labour issues. In April 2020, the Road Haulage Association
(RHA) reported that 46 per cent of the UK’s lorry fleet was
not operating due to the crisis, and that without support from
the Government, hauliers were facing collapse and insolvency
(Reynolds, 2020b). The RHA originally sought primarily
financial help for the sector on 16 March 2020 (Reynolds,
2020a). The Government responded on 18 March with a
relaxation of working hours rules for HGV drivers, and on 17
April with respect to ‘fit to drive’ medical certification (G O V.
UK, no date). These measures only partially addressed the
issues and in late April the RHA reported that 46 per cent of
the UK’s lorry fleet was not operating due to the crisis, and
again asked for government support suggesting that without
it, hauliers were facing collapse and insolvency. These supply
chain disruptions led to delivery delays, congestion in the
warehousing sector and higher freight and transportation costs.
This was a global issue and in the early stages of the pandemic,
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disruptions from cross- border restrictions and lockdowns at
ports and harbours led to an 11 per cent decline in global
demand for goods shipped by ocean freight and a reduction
in shipping capacity by more than 13 per cent (Fitch Ratings,
2020; Twinn et al, 2020).
By September 2020, with restrictions easing, demand
for ocean freight returned and with it huge price increases
due to labour costs and restrictions. At the time the British
International Freight Association reported a 40 per cent
increase in transpacific freight costs from previous historical
highs (see also Carrière- Swallow et al, 2022). With strains on
ocean freight and borders closed to road freight, demand for
air cargo increased significantly, as aviation played a vital role
in bringing much needed supplies to the UK from overseas.
UK Civil Aviation Authority (UK CAA) data, for example,
show that cargo operations increased by 42.7 per cent in
2020, with erstwhile commercial passenger airlines adapted
to operate dedicated cargo flights across the globe. The UK
saw 1,348,044 tonnes of freight on cargo dedicated aircraft
in 2020, an increase of 56.8 per cent from the previous year
(UK CAA, 2021).
Turning to warehouses and distribution centres, some
supermarkets operate directly within the wholesale sector with
so- called hybrid wholesalers, and therefore have their own
warehouses. Chief among these are the Co- op and Morrisons,
which grew their market share within the wholesale sector
from 6.5 per cent in 2018 to 9.2 per cent in 2020 (Kam City,
2020). Other supermarkets rely on traditional wholesalers
and the warehouse capacity of those firms. Some of these are
very large businesses. In March 2021 The Grocer magazine
listed the top 30 and showed how they had fared during the
first year of the pandemic. The biggest firm is Booker with
196 depots, 13,000 sta and a 2020/ 21 turnover of over £6
billion. Seven other companies have turnovers of more than
£1 billion, including the likes of Bidfood UK, Costco and
Bestway. Hardly household names but massive players in the
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food chain. What is fascinating about The Grocer data for
the first COVID- 19 year, are first the low margins in the
sector and second the highly variable financial performance.
Booker’s margin (that is, profits as a percentage of turnover)
of 4.1 per cent was bettered only by LWC Drinks with 5 per
cent. The majority had margins of less than 3 per cent, so
most wholesalers did not profit massively from the heightened
attention to food provisioning during the pandemic. Margins
for supermarkets are of a similar order, averaging around 3 per
cent, a margin that fell to 1.8 per cent post- pandemic in the
year 2022– 23 (Competition and Markets Authority, 2023).
Both these parts of the food chain are dependent on volume
sales rather than large mark- ups, making them vulnerable to
unexpected change. Wholesalers with businesses based on
supplying retail shops and supermarkets saw increased demand
while those focussing on hospitality and catering for institutions
such as schools really suered. For example, Castell Howell
Foods, saw a 70 per cent revenue drop and furloughed around
55 per cent of its 700- strong workforce in the first three weeks
of the pandemic because of its historic focus on the catering
sector, but it pivoted its business to supplies for NHS Wales
workers, schoolchildren and the vulnerable (Snowdon, 2020).
Some wholesalers were also able to oset losses by finding
new routes to market. JJ Foodservice, for example, launched
JJ Home in July 2020, signalling the permanent addition of
its direct- to- consumer (DTC) service – initially introduced as
a stop- gap – to the wholesaler’s portfolio. Similarly, Bidfood
formalized its DTC business ‘Bidfood at Home’ and Brakes
launched its ‘Food Shop’ venture selling DTC in March 2020
(Kam City, 2020).
A survey in the week commencing 30 March 2020, by
Bis Henderson Space,1 a company specializing in accessing
additional warehouse space and operational services quickly and
eectively (another cog in the hidden middle), found that the
UK could run out of warehouse capacity within a fortnight as
imported goods piled up at storage locations and the lockdown
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was so dramatically changing consumer demand. According
to the survey, 90 per cent of respondents reported facilities
at full capacity and suggested the overall market had just 10
per cent capacity available. Another survey of logistics and
warehousing operations carried out by the United Kingdom
Warehousing Association (UKWA) in April 2020 showed a
‘lack of available warehousing space in the face of COVID- 19
restrictions’, with 90 per cent of respondents confirming they
were completely full, ‘suggesting that the market had just 10%
pallet space availability’, with the high ‘potential of reaching
zero capacity within weeks’ (UKWA, 2020). According to
UKWA chief executive Peter Ward:
remaining capacity is likely to be full by early May. With
outbound flows severely reduced or stopped altogether,
as stores and factories are closed, inbound flows have
become a mounting problem. … Inbound supply chains
continue towards destination, arriving at ports, requiring
receipt, handling, onward distribution and storage. (van
Marle, 2020).
This shortage of warehousing space was due to an imbalance
between outbound non- essential goods slowing or stopping but
continued inbound flows of imports to the UK. In response,
the UKWA established a COVID- 19 Emergency Space
Register to help coordinate storage. And they teamed up with
Bis Henderson Space to coordinate an industry response to
the impending container storage crisis. UKWA/ Bis Henderson
were able to support cargo owners in locating inland o- dock
storage facilities for fully loaded containers.
The just- in- time system: what is it and did it work in the
pandemic?
We have referred to this before but let’s dig in a bit deeper
now. It’s a phrase that was being bandied about with regard
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KEEPing THE suPERmaRKET sHElvEs sToCKEd
51
to the food system, often pejoratively, prior to the pandemic
and received greater currency during lockdown. Its origins are,
however, nothing whatsoever to do with food retail. Taiichi
Ohno, a Japanese industrial engineer, pioneered the approach
in the automobile industry in the 1950s and 1960s. He was
general manager of a Toyota plant from 1962 and in the decades
that followed his principles were adopted and adapted for many
production systems in many countries, in particular moving
away from its origins in a single production process for cars,
to a strategy for supply chains with more than one partner.
Its principles seem eminently sensible. Moving commodities
and products when they are needed avoids unnecessary storage
costs and the associated environmental footprint. Waste can be
reduced and eciencies maximized. That at least is the theory
but there are those who criticize JIT as a high- risk strategy,
ill- suited to coping with shocks associated with the biosecurity
and climate change risks of a globalized world (Garnett et al,
2020). That is countered by those in the business world who
point out that actors in any supply system, JIT or otherwise,
are bound to weigh up the balance between the eciencies of
delivering just enough food to supermarkets at just the right
time and build in resilience to possible shocks where necessary.
As operations management specialist, Rob van Stekelenborg,
puts it:
Sure, a JIT system that is near- buerless is a vulnerable
system. … But inventories are very much in control.
I even dare to state that traditionally run supply chains
are at more risk than JIT- operated ones. Because
JIT- ones have more control over their inventories.
Traditionally operated companies are continuously at
risk due to their production control system that leads
to unbalanced stocks. … JIT, or more generally Lean
organizations, typically have both a highly reactive and
thorough problem- solving culture. This means that Lean
organizations, also by design, are able to significantly
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FEEding PEoPlE in a CRisis
reduce the time that the disruption actually impacts the
organisation. Their ability to recover, and the speed with
which they do so, is often impressive. … They often opt
for a single source strategy with carefully selected and
competent suppliers for whom they are an important
customer, and in which they sometimes even have a
financial stake. They consider their suppliers true long-
term partners, instead of the short- term, arms- length
relation that often exists in more traditional supply
chains. This creates a strong interdependency between
customer and supplier, a strong loyalty towards the
customer, and a high reactivity towards joint problems.
(van Stekelenborg, 2020)
This characterization fits well with the strategies developed
by supermarkets over many years to develop strong bespoke
relations with suppliers, to develop and promote own brands,
and to build their own distribution logistics. JIT clearly
depends on good knowledge of likely consumer demand
and, in normal circumstances, the supermarkets are adept at
making this work. The few weeks immediately prior to the first
lockdown and the first weeks of the lockdown itself were far
from normal. Warnings of panic buying and images of empty
shelves became a common and recurring motif but a repeat of
the pre- Lockdown 1 episode never materialized. Supermarket
shelves may have looked a bit sparse at times in 2020 and 2021,
but, contrary to the image of the empty shelf, the supermarkets
were able to use the logistics capability of the JIT system in a
way that showed the UK food system to be remarkably resilient,
adaptive and adept at ensuring that the supply tap remained
on and shelves remained mostly fully stocked. This, however,
was not without considerable expenditure of time, labour and
money, depleting many suppliers’ financial resources.
So, what did all this mean to the distribution of retail sales
during the pandemic? The big four retailers and convenience
stores significantly increased their turnover from 2019 to 2020
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53
while premium retailers had a smaller increase, and discounters,
without the same capacity for online sales and home deliveries,
a reduction of 2 per cent (Jaravel and O’Connell, 2020). Using
ONS data, Rivington et al (2021) demonstrate how in terms
of volume, conventional food retail sales increased between 3
per cent and 10 per cent through March to November 2020
compared with February 2020, with an overall year- on- year
increase of 4.3 per cent to December 2020. Convenience stores
had a particularly good 2020 with a reported 39 per cent increase
in sales during the pandemic, with market share increasing from
12.4 per cent to 16.3 per cent (Lee, 2020). However, it was
the online food retail sector that saw, by far, the most dramatic
year- on- year increase in both sales value and volume, up an
incredible (though not unsurprising) 126 per cent and 79 per
cent respectively, with the latter figure representing the largest
increase of any online UK retail sector (Rivington et al, 2021).
Conclusion
When Yonder Consulting undertook a survey in July and
August 2020 asking 100 senior stakeholders (including
politicians, leading business journalists, and opinion- shaping
non- governmental organizations (NGOs)), which businesses
or sectors had emerged from the pandemic with their
reputations most enhanced, the most frequently praised were
the supermarkets (Webb, no date). And from the evidence of
this chapter it is not hard to see why. Leading UK retailer Tesco
managed to grow from fulfilling 660,000 orders a week to
1.5 million by the end of June 2020 (Isaac, 2021). ‘A challenge
like no other’ is how Alan Stewart, Chief Financial Ocer of
Tesco, described COVID- 19: ‘Our business probably changed
more in the couple of months following the outbreak than in
the whole of the last 10 years’ (ICAEW, 2020). At the peak of
the crisis, Tesco recruited almost 50,000 new temporary sta
to support its shop- floor workforce, in distribution centres and
to work as delivery drivers (ICAEW, 2020).
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