Ever since celebrity chef Hugh Fearnley-Whittingstall revealed the unsavoury conditions in which battery-farmed hens are kept in his TV show Hugh’s Chicken Run, finding free-range chicken on supermarket shelves has been more than a bit tricky.
Over the next few weeks grocers can expect several more surges in demand when the famed Delia effect takes hold. The TV cook’s new series, How to Cheat at Cooking, airs on BBC2 this month and one mention of an ingredient by Smith is often enough to create a national shortage.
Whatever the reason, sudden upsurges in demand can be problematic for retailers. And it’s not just food. Boots was forced to limit customers to one purchase of its No7 Protect & Perfect Beauty Serum in order to cope with demand after a BBC2 Horizon programme suggested the anti-wrinkle cream actually worked.
The ability to manage spikes in demand is paramount in order to limit customer dissatisfaction. Companies are able to achieve this thanks, in part, to reliable research.
One of the many challenges faced by entertainment retailers’ supply chains is when an artist dies and fans flock to buy their work. Virgin Megastores even employed people specifically to research artists who had died, or were likely to die imminently, to help anticipate a leap in demand.
However, even if retailers are researching consumer trends and are adept at working effectively with publishers, PRs and TV channels to gather information, sales spikes are still difficult to predict.
IGD senior supply chain analyst Darran Watkins says: “One of the things we always say is that forecasting is always wrong. The key question is how wrong the forecast is and how you manage that.”
Statistics gathered by IGD on sales of 20-strong packs of Foster’s lager exemplify the problem: nationwide sales come in at anywhere between 5,000 to 20,000 barrels (about 75,000 to 300,000 cases) a week. And, of course, just as you can’t make chickens grow any quicker, you can’t make beer brew any faster to make up for any shortage.
Need for speed
Eqos chief product officer Chris Foulkes recommends retailers look to the fast-fashion world in order to learn from their supply chain practices. One way to manage the problem is to ensure it’s easier and quicker to get the product on the shelf if you do run out. Retailers therefore need to focus on ways to fast-track any of the product that is already in the supply chain. “Part of that is becoming leaner and meaner and having less product clogging up the supply chain in the first place,” he says.
Watkins also says that a major contributor to the problem of sudden peaks in demand is retailers’ late confirmation of requirements with manufacturers. “It’s important to make sure the retailer and supplier agree as early as possible,” he says.
Borders head of supply chain Geoff O’Neill says to ensure the supply chain remains as efficient as possible, retailers need to show great foresight, forecasting and planning, as well as maintaining good relationships with – in Borders’ case – publishers and distributors.
O’Neill says that singer Amy Winehouse’s performance at last month’s Brit Awards resulted in a huge upsurge in sales of her album Back to Black. “When something truly unexpected occurs, we get instant feedback from our booksellers and pull out all the stops to get stock into the stores,” he says.
Watkins also stresses the importance of integrated business planning and aligning departments – that includes everyone from sales, marketing and commercial teams to supply chain functions, store staff and manufacturers. “That way, you have the most opportunity of ensuring product hits the shelves,” he says.
Neither should retailers’ supply chain teams overlook the importance of store staff. Sometimes, the shelves may have been emptied but the product is still in stock. It is therefore important to ensure they too are aware of any major campaigns that might affect demand. Replenishment routines may also need to be adapted. “It requires constant focus,” warns Watkins.
In fact, O’Neill says a common pitfall is overlooking the store staff aspect. “It’s about creating a culture and mechanism whereby staff feel enabled to make decisions, and are also able to communicate opportunities back to the buyers for them to take advantage.”
Senior staff at Waitrose agree that keeping shop staff informed helps enormously. Before Delia Smith’s latest book, which precedes her TV series, was published, the supermarket chain says it contacted all branches with details of which products featured in her recipes. “This allowed them to adjust their ordering to reflect the additional demand,” says a spokeswoman.
Any publicity, good or bad, is a great driver of sales for retailers. But a supply chain that leaves them ill-equipped to cope with sudden demand will have a major impact on short-term sales and, perhaps even more importantly, long-term customer loyalty.