Panic-buy­ing left Waitrose ‘hours from run­ning out’

In the week be­fore lock­down Bri­tish house­holds made 42m more shop­ping trips than usual and that was just the start of the gro­cers’ prob­lems, writes Laura Onita

The Daily Telegraph - Business - - Front Page - By Laura Onita

WAITROSE came within hours of run­ning out of food in its shops at the height of panic-buy­ing ear­lier this year, bosses have re­vealed.

The gro­cer – which sold a year’s worth of pasta in March alone as shop­pers scram­bled to stock up ahead of lock­down – came close to be­ing un­able to de­liver prod­ucts into su­per­mar­kets.

Andrew Mur­phy, di­rec­tor of op­er­a­tions at Waitrose and John Lewis, said that for 10 days in March the abil­ity to get food to where it was needed was “in­cred­i­bly touch-and-go”.

He said: “We re­ally did think we were within hours of lit­er­ally not be­ing able to get any more prod­uct into our ware­houses to then sub­di­vide it and then send it out to our su­per­mar­kets.”

The re­marks, re­vealed in a se­ries of in­ter­views with top gro­cers six months on from the cri­sis, lay bare the pres­sure on Bri­tain’s creak­ing food sup­ply chain as shop­pers filled their cup­boards with rice, pasta, long-life milk, home bak­ing in­gre­di­ents, frozen foods and clean­ing prod­ucts.

Richard Walker, the man­ag­ing di­rec­tor of Iceland, said: “Our sup­ply chains were blind­sided. It was very shock­ing.”

At Waitrose, staff were trans­ferred across from sis­ter depart­ment store chain John Lewis to cope with the de­mand. Other su­per­mar­kets had to hire thou­sands of ex­tra work­ers.

Al­though there was enough food in the sup­ply chain, busi­nesses strug­gled to keep up with the pace at which shop­pers were buy­ing items.

Their so-called “just-in-time” sup­ply mod­els meant only al­low small amounts of stock were stored on site.

All re­sorted to cut­ting their ranges to in­crease pro­duc­tion of key items, such as bread.

Dave Lewis, chief ex­ec­u­tive of Tesco, said: “There was quite a lot of dis­cus­sion with sup­pli­ers to in­crease the vol­ume. That sort of ac­tiv­ity went on re­ally quite quickly in or­der just to in­crease the ca­pac­ity of the sup­ply chain.”

There was a mo­ment in early March when it felt to Andrew Mur­phy as if Bri­tain’s most re­li­ably mid­dle class su­per­mar­ket might buckle un­der the strain of an un­prece­dented cri­sis. As sup­ply chains wob­bled and thou­sands of work­ers were forced to self-iso­late, the hordes of panic-buy­ers kept com­ing, fu­elled by pic­tures of empty shelves and queues of shop­pers snaking round packed car parks.

“We re­ally did think we were within hours of lit­er­ally not be­ing able to get any more prod­ucts into our ware­houses from sup­pli­ers and send it out to our su­per­mar­kets,” says Mur­phy, who is in charge of op­er­a­tions at Waitrose.

“The spike [in panic buy­ing] was so pro­found and so rapid. You can’t magic up vans and you can’t magic up new ware­house space. There were about 10 days where it was just in­cred­i­bly touch-and-go.”

Al­though only a few months have passed since those early days of the pan­demic, it is easy to for­get the sense of ter­ror in the aisles as Covid hit Bri­tain.

What had pre­vi­ously been dis­missed as es­sen­tially a Chi­nese prob­lem – then an Ital­ian one as it ripped through the towns of Lom­bardy – was shak­ing the coun­try out of a decades-old sense of com­pla­cency.

So­ci­ety it­self seemed on the brink and, for the first time since the Se­cond World War, mil­lions of Bri­tons be­gan to fear they would be un­able to get the ba­sic ne­ces­si­ties.

It was a test that su­per­mar­kets ul­ti­mately passed, but only af­ter star­ing into the abyss.

“Col­leagues in Tesco with 45 years of ser­vice in gro­cery, they will tell you that they’ve never ever seen any­thing like it, not even close,” says Dave Lewis, the chief ex­ec­u­tive of Tesco.

“The thing that we were most fo­cused on was, for how long would that sort of peak in de­mand last? It was very much ‘take it day by day and do what­ever we could to make things avail­able’.

“But no, I didn’t ever think that we wouldn’t cope.”

Dis­as­ter first struck around March 2. Toi­let roll dis­ap­peared first, with an ex­tra £17.6m spent that week com­pared with the year be­fore in be­hav­iour mir­ror­ing what had al­ready hap­pened on the Con­ti­nent that sparked a rush of un­easy jokes.

Then frozen food, cans and jars started to run out and sub­se­quently fresh meat as fran­tic fam­i­lies stocked up. Waitrose sold a year’s worth of pasta in March.

Sales boomed at the likes of white goods seller AO World, which re­ported a 200pc surge in freezer sales dur­ing the week to March 9 as con­sumers rushed to se­cure more space for their emer­gency stash.

The dan­ger was not that food it­self might run out, sim­ply that su­per­mar­kets could not get it on the shelves fast enough to match de­mand. At the peak of the cri­sis, from March 16 to 19, house­holds made 42m more shop­ping trips than usual. They each spent £62.92 more in the month as a whole, ac­cord­ing to data firm Kan­tar. Stores were busier even than Christ­mas, a time for which gro­cers have all year to pre­pare.

If stores had ran out com­pletely, it was feared so­cial or­der could break down. One an­a­lyst sug­gested the army might be needed to pro­tect food trucks.

“We have two very busy days at Christ­mas, but we have had all year to pre­pare for them,” says Lewis, who was on the road vis­it­ing stores dur­ing the cri­sis.

“We had seven to 10 days that were like those two days, but with no time to pre­pare.”

Mur­phy’s team at Waitrose had to re-route some lor­ries di­rectly to stores and by­pass de­pots to fill the shelves quicker, dis­rupt­ing a long-stand­ing model where ev­ery­thing went through a cen­tral hub.

“Think of the fuel cri­sis,” says one gro­cery ex­ec­u­tive.

“There was more than enough fuel to go around, but cus­tomers started to be­have in such a way that sug­gested there wasn’t and it be­came self­ful­fill­ing. We were at the ex­act same point.”

In the back­ground, su­per­mar­kets were fran­ti­cally as­sem­bling war cab­i­nets. Not only did they have to deal with a surge in de­mand, but there were fears that thou­sands of staff could be struck down by Covid and un­able to do their jobs.

Firms put es­tab­lished plans into ac­tion. A cou­ple of the ma­jor gro­cers had been on high alert since Jan­uary, when Wuhan be­came a hot­bed for coro­n­avirus in China.

Ex­ec­u­tives be­gan speak­ing to other re­tail­ers abroad, es­pe­cially in Italy, which was among the first to be badly hit on the Con­ti­nent.

Other chains leaned on the ex­per­tise of their di­rec­tors that had worked through the Sars epi­demic to plan a re­sponse.

At Tesco, Lewis pre­vi­ously asked staff to react to a mock sce­nario as­sum­ing they lost the head of­fice, which helped when lock­down was im­posed.

“We didn’t fore­see this at all,” he says. “But we did ask our­selves the ques­tion, could we run the com­pany with­out the of­fice?”

The smaller play­ers had less time to pre­pare.

“We could see sales start­ing to take off on cer­tain cat­e­gories, which gave us an in­di­ca­tion that peo­ple may panic buy if in­deed a lock­down did hap­pen,” says Andy Perry, the sup­ply chain and lo­gis­tics di­rec­tor at Co-op.

“There was no time to plan for it re­ally, so it was al­most ‘how are we go­ing to react now’.”

The re­tailer set up an “in­ci­dent man­age­ment team” straight away and it hired 5,000 ex­tra driv­ers, shelf stack­ers and ware­house work­ers in a week.

“We moved heaven and earth in a very short pe­riod of time,” says Perry about the hir­ing spree.

He was not the only boss to take ac­tion. Tesco cre­ated 20,000 jobs and ri­vals such as Mor­risons, Aldi, Lidl and Asda swiftly fol­lowed suit.

Many of these were tem­po­rary work­ers laid off as nor­mal­ity re­turned, but they were cru­cial to keep stores go­ing.

The usual sense of ri­valry be­tween chains dis­ap­peared too as fierce com­pe­ti­tion in one of the world’s most so­phis­ti­cated gro­cery mar­kets gave way to some­thing else – a grim de­ter­mi­na­tion, in a phrase first ut­tered by Mor­risons’ boss David Potts, to “feed the na­tion”.

The as­sault of the Ger­man dis­coun­ters Aldi and Lild on the mar­ket, with their ul­tra low prices, has turned su­per­mar­ket shop­ping on its head over the last decade.

The in­cum­bents have fought back with their own cheaper ranges but they are all vy­ing for a shrink­ing pool of prof­its in a ma­ture mar­ket where there is vir­tu­ally no growth.

“We’ve had this cross in­dus­try col­lab­o­ra­tion, which is bizarre,” says Richard Walker, boss of frozen food chain Iceland. “Nor­mally re­tail­ers want to wake up and kill each other, but we stood shoul­der to shoul­der.”

All the ma­jor chains had daily calls with min­is­ters and a weekly con­ver­sa­tion with Ge­orge Eus­tice, the En­vi­ron­ment Sec­re­tary.

The gen­eral con­sen­sus among them is that the Gov­ern­ment lis­tened and re­sponded to their demands.

“They were very avail­able,” one su­per­mar­ket boss says.

One such ex­am­ple was the re­lax­ation of com­pe­ti­tion laws, which in nor­mal times stops the gro­cers com­mu­ni­cat­ing with each other or shar­ing re­sources and data of any sort as it could harm shop­pers.

Rules around night-time de­liv­er­ies were eased to give them a chance to stock back up.

They had the op­tion to co-op­er­ate to keep shops open or share dis­tri­bu­tion de­pots and de­liv­ery vans.

Mean­while, le­gions of staff were fac­ing a ti­dal wave of scared and some­times abu­sive cus­tomers, in stores with no screens or safety equip­ment.

Re­tail an­a­lyst Clive Black, of bro­ker Shore Cap­i­tal, says: “The su­per­mar­kets were real he­roes in the eye of the coro­n­avirus storm.

“You didn’t find shop as­sis­tants play­ing silly b-----s.

“They turned in day in, day out to feed us with no [plas­tic] screens and no face masks. That brav­ery has been

‘We’ve had this cross in­dus­try col­lab­o­ra­tion, nor­mally re­tail­ers want to wake up and kill each other’

‘I have never worked so hard as I did those first five weeks. Talk­ing to sup­pli­ers ... It wasn’t daily, nor hourly, it was ev­ery 10 min­utes’

‘The gro­cers were real he­roes in the eye of the coro­n­avirus storm. You didn’t find shop as­sis­tants play­ing silly b------s’

un­der­stated. Talk of [su­per­mar­kets] prof­i­teer­ing from the cri­sis is mis­placed.”

Asda boss Roger Burn­ley’s In­stragam ac­count is lit­tered with pho­tos and videos of him trav­el­ling the coun­try to rally the troops.

Walker, of Iceland, con­tacted McDon­ald’s to ask if he could use the sup­ply of plas­tic gloves which their staff usu­ally wore to han­dle food at now-shut­tered restau­rants.

An­other gro­cery boss has tales of run­ning on adrenalin and only sleep­ing three hours a night for days in a row.

Lewis says: “The thing that concerned me the most was staff and stores be­cause of the un­prece­dented de­mand, and the ner­vous­ness and fear of cus­tomers was very, very pal­pa­ble. But all of my mem­o­ries, I have col­leagues do­ing quite in­cred­i­ble things to help the com­mu­nity and NHS work­ers.

“That sort of thing just sort of puts a lump in your throat re­ally. I honestly don’t say this be­cause it’s an in­ter­view.”

One of the big­gest hur­dles was get­ting food boxes de­liv­ered to the 1.5m peo­ple that the Gov­ern­ment asked to “shield” be­cause poor health made them par­tic­u­larly vul­ner­a­ble to Covid.

Min­is­ters ini­tially ap­proached Sains­bury’s to ask if it could take charge of the task to iden­tify vul­ner­a­ble peo­ple as it had its own ro­bust data­base due to Nec­tar, the loy­alty scheme. The project be­came a joint ef­fort be­tween all the ma­jor gro­cers and whole­salers Bid­food and Brakes.

Firms such as Mor­risons and Marks & Spencer set up busi­nesses vir­tu­ally overnight, sell­ing food boxes with ba­sic items for a set price for de­liv­ery to cus­tomers’ homes, es­pe­cially for those who could not leave the house.

There were also de­ter­mined ef­forts to shore up sup­ply.

The gro­cers worked closely with man­u­fac­tur­ers to sim­plify the ranges so that, for ex­am­ple, eight dif­fer­ent types of bread be­came two, push­ing up pro­duc­tion vol­umes and help­ing get prod­ucts in stores more quickly.

“We were on daily, if not twice-daily con­fer­ence calls with those sup­pli­ers,” says Ru­pert Thomas, food and gro­cery di­rec­tor at Waitrose.

An­other ex­ec­u­tive says: “I have never worked so hard in my life as I did those first five weeks.

“Talk­ing to sup­pli­ers... It wasn’t daily, it wasn’t hourly, it was ev­ery 10 min­utes.”

The chaos did not just hit bricks and mor­tar stores. A del­uge of cus­tomers signed up for home de­liv­ery, trans­form­ing what had pre­vi­ously been a fairly niche part of the mar­ket and con­found­ing pre­dic­tions that most of the public would al­ways pre­fer to buy food in a phys­i­cal shop. Be­fore the pan­demic, about 93pc of gro­cery shop­ping in the UK was still done in stores, so the ca­pac­ity to ramp up food de­liv­ery many times over was lim­ited.

On­line now ac­counts for about 13pc of the mar­ket.

Firms rapidly ran out of de­liv­ery slots as the chaos struck, with no avail­abil­ity for weeks ahead.

Tim Steiner, the boss of on­line gro­cer Ocado, had to re­tool his web­site to cope with the num­ber of new cus­tomers try­ing to sign up.

“You’ve got to com­pletely change how you run a busi­ness and you don’t have time to think about it,” he says.

“You don’t have six months warn­ing, it just hit us all al­most overnight.”

Iceland has also boosted its on­line of­fer­ing. Walker says: “Ini­tially [store staff ] were de­lighted be­cause it’s more sales.

“But then days turned into weeks [of bulk buy­ing] and it be­came ex­haust­ing. They were on their knees, there were empty shelves, it was shock­ing. They were deal­ing with this un­par­al­leled panic buy­ing.”

Walker has been a vo­cal critic of peo­ple’s be­hav­iour as the out­break took hold, point­ing out that largely only af­flu­ent peo­ple could af­ford to buy more of ev­ery­thing.

Later data has in­deed sug­gested that the mid­dle classes in the south of Eng­land and shop­pers in Lon­don had been hoard­ing the most goods.

What has also be­come ap­par­ent since, says Char­lotte Scott, con­sumer in­sight di­rec­tor at Kan­tar, is that “ev­ery­one just did a bit more stock­ing up, there wasn’t a lot of stock­pil­ing”.

Fam­i­lies stuck at home had to cook more meals af­ter the eat-out tap was turned off, so Bri­tons added a few ex­tra items to their bas­ket.

But that was enough to stretch the sys­tem al­most to a tip­ping point. The coun­try spent a record £10.8bn on gro­ceries that month alone, more than at Christ­mas.

While sta­ple cup­board items were in short sup­ply, other in­gre­di­ents flooded the mar­ket af­ter restau­rants, bars and pubs were forced to shut. It was the gro­cers’ turn to help farmers out.

“There was a big de­mand for mince, which is more ver­sa­tile as peo­ple were do­ing more cook­ing at home, but less for the premium cuts,” says Co-op’s Perry.

Sud­denly farmers were in a place where they did not think they could af­ford to cull an­i­mals be­cause they would lose cash.

“We did a lot of work with other re­tail­ers and min­is­ters to take more premium cuts, pro­mote them heav­ily to try to help sup­pli­ers,” says Perry.

Kan­tar has es­ti­mated that an ex­tra 503 mil­lion meals a week, mainly lunches and snacks, were pre­pared and eaten at home dur­ing lock­down.

Over the years, su­per­mar­kets have moved to­wards so-called just-in-time sup­ply chains to stay prof­itable. This means that a lo­cal branch will roughly know how much stock it needs ev­ery day based on what is sold and pre­dict­ing its cus­tomers’ be­hav­iour.

It does not have a large stock­room in the back, and lor­ries de­liver fresh food and other items daily.

When peo­ple bought more than they typ­i­cally do they de­railed a tightly-cal­i­brated busi­ness model.

Within weeks, how­ever, the sup­ply chains were al­most back up to pre-coro­n­avirus lev­els and avail­abil­ity re­cov­ered.

Perry, of the Co-op, says: “It’s ab­so­lutely not the end of the just-in­time [sup­ply sys­tem] be­cause to go back to where we were be­fore would re­quire mas­sive cap­i­tal in­vest­ment in space and ware­hous­ing and ul­ti­mately, we would put the prices up. There’s no ap­petite to do that.”

The pan­demic de­railed life as we knew it. But there is new un­der­stand­ing from both re­tail­ers and sup­pli­ers of what can be achieved in a time of na­tional cri­sis.

As one ex­ec­u­tive puts it: “Be­cause the food in­dus­try was there for the coun­try, cus­tomers will have been given some con­fi­dence that they don’t need to panic and can trust the sys­tem.”

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