Promotions continue to disrupt a return to balanced supply for key Ambient categories

Posted by Jonathan Kittow on 10/05/20 12:29

Thank you to all those suppliers who contributed again this week as we start to progress from crisis to planning to establish the rules of the new norm. Supplier stocks situation are beginning to recover for many lines. However, with ‘The Big Trolley Shop’ returning and near-doubled on-line shopping from store, promotions on the key growth categories are simply encouraging cupboard-stocking on the products and brands on offer, which are already selling 20-30% more than normal.

The resultant out-of-stock on shelves in-store and product and brand switching, is severely restricting retailers and suppliers’ ability to maintain supply, let alone forecast demand. Many suppliers are continuing to rationalise ranges and, whilst monitoring the situation weekly, are likely to remain doing so until at least end June. Those with production capacity challenges are seeking to align recipes and pack sizes to improve productivity; and many retailers seem to be sympathetic - is there an opportunity to standardise ranges more in the long term?

By comparison, chilled suppliers continue to report that EPOS sales data is now much closer to true demand and forecasting is becoming less unpredictable on many ranges, as most products are bought to be consumed within a few days – cheddar being the obvious exception, as consumers devour more than ever!

Some ambient suppliers have successfully reduced (temporarily) some their Minimum Life-On-Shelf  levels from 75% (typical) to 50%, but not for all customers; some practical issues around the administration required, but get in touch if you would like more info.

Transport costs continue to rise due to a combination of higher volumes, but not necessarily full loads, for key customers. Lower Foodservice volumes and sku rationalisation has reduced picking costs, however for many 3PLs this also reduces the offset cost benefit from combining higher revenue small drops, with near-full loads – requiring higher rates to cover the deliveries. 

Service reviews with Mults are returning and some suppliers have been approached this week re top-to-tops, but there currently remains a general acceptance of the need for rationalisation.

  • Suppliers are seeking to minimise the changes for range reviews, due to availability and production challenges. Suppliers are having to take the lead and TELL retailers what they can and can’t have – a position that is not always being well received, despite the situation.
  • Some retailers are postponing range changes, while others are progressing as normal – although merchandising resources are not expected back in store until June/ July and social distancing will make this activity more of a challenge


digital-chart-1080pTAKE OUR SURVEY: We are running a survey to help track service levels, rationalisation levels and sales uplift levels. We welcome all suppliers to be a part of the survey. Click Here

Also, joining us next week is Andy Coe, Senior Director from Retail Insights – giving an overview of changes within channels, store sectors and stores to provide context to the supply chain changes suppliers are seeing

HOW TO JOIN THE VIRTUAL COLLABORATION GROUPS  CLICK HERE

Topics: supply chain, "coronovirus"