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It's not just panic buying that's emptying the supermarket shelves. Far bigger forces have been unleashed

JIM ARMITAGE
empty shelves at a supermarket in London: AFP via Getty Images


If you believe the headlines, Britain is a land of the selfish. The I’m-all-right-Jack moron, happy to pile up his trolley with more bog roll and pasta than any butt or stomach could consume in a lifetime.

We’ve seen them in the papers and on the telly, sneering into the cameras how they don’t care about anyone but themselves. But are these panic buyers really the cause of the empty shelves in our supermarkets? Or is something more complicated, and less depressing, going on?

Talking around the industry, it seems there’s a bit of both. Supermarket chiefs will tell you that sales in the last week have in some categories soared 130% as people have stampeded to stock up.

Says one: “It’s like Christmas, but with a difference. We plan for Christmas every year for months in advance. This has come almost overnight.”

Modern supermarkets are super-marketing machines. They have supremely sophisticated algorithms that follow the sales data minute by minute, comparing against previous days, months and years, factoring in weather patterns, sporting events and an ever increasing number of other variables.

In normal times, it works well. Supply is kept tight so only a tiny fraction of food goes to waste, or into the discount bin. But come a black swan like coronavirus, and the whole system goes to pot.

Supermarkets and their suppliers are so used to operating on a hair’s breadth inventory model that when a black swan event like coronavirus floats in, the system collapses.

One food supplier to the majors says the crisis has exposed the shortcomings of relying on “algo” computer models, and should lead to structural changes in the way food is supplied and stored, with more slack built into the system to prevent shortages.

But the industry rejects the charge.

As Clive Black, analyst at Shore Capital, puts it: “Even Mystic Meg couldn’t have predicted this level of demand.”

One supermarket supply director adds: “Harry Potter with his magic wand couldn’t have kept our shelves stocked last week. It was like being plundered by plagues of locusts.”

He witnessed a customer in one East London store battling with a security guard as she tried to wheel out a trolley loaded with tins of food without paying. “She was refusing to pay because the queues were too long,” he says.

He saw another shopper abusing an elderly female cashier at his Cambridge store for not having enough on the shelves. “I thought the country was going to get thrown into total uproar like the riots of 2011,” he says.

“It was most marked in London and the south east — the rich were loading up their big cars and leaving nothing for everyone else. Poor people can’t afford to panic buy.”

While there’s no doubt some people were behaving like that, data from market research group Kantar points to a more subtle shift in behaviour. It shows that, in the week to March 17, the amount people were buying per shop was up, but only by an average of 6%. The difference was, people were shopping 12% more often.

Says Kantar’s head of retail and consumer insights Fraser McKevitt: “This is a case of not the few but the many. Lots of people buying a little bit more.”

And when you think of it, that behaviour makes sense. People have seen that there’s not been enough pasta or tinned tomatoes, so when they find it, they buy a little more than they immediately need.

Also, knowing there was a chance of a lockdown coming, they bought enough for a few days, just in case.

Supermarkets bridle at the suggestion that there has not been enough food for the public. As one director puts it: “There is no food shortage. There is a glut of food. There is just too much demand.”

She and others add that the gaps on shelves have eased in recent days as shoppers’ cupboards and fridges fill up.

But surely there’s another factor at play. In normal times, much of what we eat comes from restaurants, cafes and pubs. Most office workers will buy breakfast or lunch from a local café and the kids will get a school dinner. Young Londoners these days barely know where their kitchen is, let alone how to cook.

Now all the restaurants are shut, that demand is surging into supermarkets.

Shore’s Black says Brits normally buy 60-65% of their food (measured by calories) in supermarkets. Now, it will be 85%-95% (the rest being made up of hospitals and prisons).

That extra demand is nothing to do with stockpiling or panic. Just ordinary people trying to fill their bellies.

So, supermarkets are shifting their supply chains to get more food into stores faster.

Two cite how they have instructed their pasta suppliers to cut the different shapes from eight or nine to perhaps two. That means less downtime in the factory changing the shaping tools from tagliatelle to spaghetti to fusilli and repeatedly swapping the packaging around.

“People just want pasta. They’re not too bothered what type,” says one.

Fewer choices of pack sizes make an impact, too. Both in speeding up manufacture, but also making shipping less complicated.

Supermarkets are doing similar rationalisation of their product categories. Stop stocking fashion and homewares and you can make way for more pasta and sauces in your depots and stores.

Fresh foods aren’t so flexible: “Eggs only come out of the hen six times a day,” says one supermarket chief. “You can’t tickle them and they give you twins.”

Geography can be a friend or enemy. Sourcing toilet rolls from Italy is difficult with travel restrictions. From Bolton, less so.

One grocer warns Spain might disrupt fruit exports as the virus spreads from Madrid. “They’re Spanish. They might just decide to keep them for their own market.”

There’s another obvious solution to supply concerns — utilising the unused capacity in the food service industry.

Jobs are being lost by the hundred from catering suppliers as restaurants close, so Brakes, Bidvest and others are starting to work with supermarkets to boost supplies to their stores.

So, have the supermarkets got it right yet?

Two of the biggest chains say they are confident the supply-demand match has stabilised in the past three days. Measures to restrict how much shoppers can buy will help eke out supply through the day, they say.

But it’s early days yet. Since the Government forced us all to lock ourselves away like Rapunzels this week, the one permitted daily trip to the supermarket will become our only pleasure. The predictable weekly shop will become a thing of the past.

How’s your AI algo going to cope with that, Mr Tesco?

Oh, and there’s another thing.

If you thought nobody had any room left at home to store more food, think again. AO World, Dixons Carphone and John Lewis say “cooling equipment” is flying out of the door.

In other words, people are panic buying more fridges so they can panic buy more food. It's a crazy world.

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