Last week’s snow had a major impact on retail – halting home deliveries temporarily but having a longer felt impact on supermarket shelves where bread and milk shortages were just the start of the problem. Here Stuart Higgins, director retail at BearingPoint, explains more about why it happened.
ED: Why do supermarkets always run out of stock in bad weather?
SH: “Supermarkets stock on a ‘just in time’ basis rather than a ‘just in case’ basis. That means that any small interruption in the supply chain can lead to shortages on shelf, for example if delivery vehicles can’t get through due to snow or ice.
It is unreasonable for supermarkets to hold higher stocks than are strictly necessary to meet usual demand levels because short shelf lives and higher consumer focus on ‘best before’ and ‘use by’ dates mean that they otherwise risk large increases in waste if the product doesn’t sell in time.
Of course, this can also be compounded by consumers ‘panic’ buying which leads to far greater than expected levels of demand that the stores simply have not had the opportunity to prepare for.”
ED: What can be done to prevent this problem in the future?
SH: “Weather is notoriously difficult to forecast accurately. However, advances in medium term weather forecasting techniques now mean it is possible to get a reasonably accurate 5-10-day weather forecast.
If this is coupled with leading edge, artificial intelligence based, replenishment systems that can predict weather-related impacts on consumer buying behaviour then it provides a basis for predicting and responding to weather events in advance to maintain availability during periods of peak weather-related demand. However, whilst one or two supermarkets are introducing such technology, the majority have not yet responded to these emerging technology solutions.”
ED: What would you say to frustrated shoppers who couldn’t understand why shelves remained empty even as the snow melted?
SH: “Supermarkets are not sitting back and letting this happen – they are continually seeking to improve stock availability under all circumstances. However, some are clearly ahead of the curve.
So, shop around, look for those that are managing to maintain supply longer during adverse conditions and switch allegiance – there is nothing that incentivises a supermarket more than the thought of losing market share to a competitor.”
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