Durable supply chains must become a top priority

4 October 2022

Following on from Cold Chain Live! 2022 in Birmingham, IGD CEO Susan Barratt examines how to make the cold chain work for shoppers.

Food and grocery supply chains have experienced a torrid time; hit by our exit from the EU, the pandemic, labour shortages and exceptional weather conditions.

Therefore, it’s no surprise that supply chain performance is spluttering, with ShopperVista research revealing persistently poor on-shelf availability across multiple product categories. For the last 12 months on-shelf availability has run at around 65%; but before the pandemic, this metric was consistently over 90%.

Shopper confidence continues to be at an all-time low. Shopper trust in the industry has also dipped, with our two key metrics – trust that food businesses will keep the shelves full and that they’ll keep food prices down – both falling.

This dramatic fall in shopper confidence has been accompanied by an equally dramatic change in shoppers’ priorities. There’s been a strong swing towards saving money across all shopper groups in the last year, and naturally this swing is most abrupt among the least well-off.

Shoppers are deploying a wide range of tactics to save money at home. Thought and effort is being put into food; people are planning meals better, cooking more in bulk and making better use of leftovers. With significant consequences for the eating out sector, our ShopperVista research reveals that some 63% of people plan to avoid eating out and a devastating 28% are skipping meals to save money. This is a clear indicator of food stress that is becoming increasing prevalent, especially for families.

In stores, promotions are key, with shoppers shifting between price points, moving from brand to private label products, from premium private label to basic or value private label products. This shifting loyalty is a challenge for all businesses and has impacts for manufacturers, wholesalers, and retailers alike.

Providing affordable and safe food is essential and with 22 million people cutting back on eating and heating and nearly six million people turning to food banks, there is clearly work to do.

There are, of course, many challenges for industry to work on, including ensuring that we have a skilled and reliable workforce, improving productivity, revolutionising our use of technology, and ensuring that sustainability remains a key focus.

However, creating a durable supply chain must come high on the list of businesses’ priorities. For many years food businesses and their partners have worked hard to drive stock out of the supply chain. Having a low stockholding and fast response was seen as efficient and desirable, especially in retail and eating out. But this assumes that stock is plentiful and there’s adequate transport capacity.

In short, supply chains were designed to optimise financial efficiency, not to proof businesses against shocks. Today we’re experiencing shortages of many key commodities that manifest themselves as out of stocks for shoppers and if we look to the future, climate change may aggregate these shortages further. Coupled with persistent shortages of transport, the ability of supply chains to be responsive has been reduced.

This poses many questions… is it time to reassess our current stockholding practices? Are current performance indictors helpful? Would holding more stock closer to shoppers increase durability and improve service? Of course, if we took this approach there would be financial implications; but if products are out of stock, then there are no winners.

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