More than a year after Covid fuelled stockpiling of necessities and grocery staples, we still see empty supermarket shelves.
Many assume this is because of an increased focus on online sales by the large grocers, especially in the US, as evidenced by this article in Insight Grocery Business in March 2021. We’ve also seen similar instances in the UK, but in the UK, we’ve blamed these stock-outs on Brexit. There have been recent articles on similar instances in the Middle East & in several EU countries too.
An increased focus on online shouldn’t lead to empty shelves in store. Especially as those who pick stock for online orders through external providers pick products off the shelf currently. This is especially so if orders are placed on Instacart (US), Uber eats or Deliveroo (UK). And Brexit shouldn’t cause stock outs of brands made in the UK using materials sourced in the UK.
So what is really going on?
As we mentioned in our previous article on the 2021 Easter egg shortage in the UK, supermarkets, and brands that sell into supermarkets, typically use last year’s sales volumes as baseline for current year orders.
Buyers have exercised some judgement this year by not ordering sanitisers, cleaning products, kitchen cupboard products (pasta, rice, flour, canned vegetables etc), cleaning products & toilet paper in line with last year’s sales, when consumers were stockpiling in anticipation of supermarkets running out of these staples due to lockdowns. However, they did not exercise the same judgement when they ordered other brands/products (confectionery, small format beverages etc). Even less so when it came to the beer, wine & spirits inventory in store.
Despite increased sales across confectionery and beverages during the later stages of the pandemic, supermarket orders were placed for similar sales volumes as last year during the same time.
So now you see stock-outs across categories and markets.
The only thing in common across categories and markets is the impact of covid on consumer behaviour and choices.
As supermarkets still order on the basis of previous year volumes, they’ve had to exercise their judgement when placing these orders. This is difficult when everything the buyer knows about consumption habits has changed, after more than a year of living under pandemic conditions/lockdowns.
A google search on habits and how long it takes to form a habit runs the gamut from 14 days to 54 days, with the most cited number being 21 days. A study by the University College of London found that it takes 66 days for a habit to form. If the new behaviours were easy, it took 20 days (the example they cite is drinking a glass of water after breakfast every day) and, based on how disruptive the new habits were, ranged to 254 days.
Many of us have lived in lockdowns/pandemic conditions for more than 254 days. Depending on where we live, this has ranged between 75 days and 270 days. Enough time for new habits to form.
Add in significant variations in weather due to climate change, and (almost permanent) changes to how and where we work and/or study. No wonder retailers/FMCG companies are struggling!
If you’d like to understand how best to leverage data to arrive at optimal order volumes for your supermarkets/brands, email me on email@example.com