In many ways, the world has changed beyond recognition in the last few months, as social distancing measures have closed down our high streets, shuttered our restaurants and completely transformed our shopping and living habits.
Over the past few months, the food industry has faced unprecedented challenges, and our newspapers are filled with stories of labour shortages in agriculture, of milk going to waste and of dried food stuck in shipping containers at the border. But despite this disruption, our supermarkets remain well-stocked and the majority of us can still enjoy our home comforts. The strength of the UK’s supply chain networks has not only meant that vulnerable communities have been able to access the vital food they need, but that most UK households are able to maintain their normal lives from indoors.
It was therefore a privilege to facilitate a conversation between two senior leaders playing an integral part in making sure we have food on our table during the Covid-19 crisis. Joining us for a recent MBS webinar was Stuart Machin, MD for M&S’ £5.9bn Food division, and Kevin Moore, Chief Commercial Officer at Greencore, the chilled, fresh and ambient food supplier which makes more than 700 million sandwiches every year.
Our discussion began by considering how each ‘phase’ of the Covid-19 crisis has impacted food supply chains, from both a retail and supply perspective.
“During the initial panic buying phase,” Kevin told the supply chain leaders who were listening to the webinar, “it felt as though shopping behaviour had changed overnight. We describe that time as the ‘hoarding phase’, and while the details differed category-by-category, demand surged pretty much across the board.”
“Our business changed almost overnight leading to a different shape of sales, both in categories and across different store formats. For example, our entire hospitality business closed – which for us being the second biggest café chain in the country is significant – and our franchise stores, such as railway stations, also closed. This has affected how we manage our whole end-to-end supply chain” – Stuart Machin
Stuart talked the listeners through some of the challenges that arose from this first period from a retail perspective: “We saw customers stockpiling the basics – and this had a serious knock-on effect to our stock at M&S. Our freshly prepared meals business went into significant decline, whilst our meat, produce and grocery categories increased significantly. Our business changed almost overnight leading to a different shape of sales, both in categories and across different store formats. For example, our entire hospitality business closed – which for us being the second biggest café chain in the country is significant and our franchise stores, such as railway stations, also closed. This has affected how we manage our whole end-to-end supply chain.
“Customers were starting to come to us for a full shopping visit, so we had to very quickly adapt to changes in customer demand and put significantly more resources and focus onto our grocery supply chain. Our pasta, for example, ran out almost immediately after one week of panic buying. It was complicated because we get our pasta from Italy, and in the past, we only placed orders a couple of times a year. Therefore, we were contacting suppliers and placing significant increases across both grocery and fresh categories.”
This initial rush was followed by what Kevin described to us as the ‘settling down period’. “After the hoarding phase, the pattern of buy was larger,” he explained. “We were seeing very functional, list-driven consumer shopping trips. I even saw people shopping with calculators, which I hadn’t seen since about 2007/2008! So a real change, which saw volumes in some areas for Greencore slide back down, but real spikes in certain categories, such as cooking sauces.”
Navigating these peaks and troughs in demand is challenging from both a supply and a retail side. I asked what measures were taken to soften the blow and keep things running smoothly.
“Our direct-to-store distribution model served us well,” Kevin told us, “and allowed us to work with the retailers to keep the ball rolling. Some of the volume uplifts that retailers took were unprecedented, specifically in the grocery areas, and at points their distribution centres really struggled to cope with that demand. We were able to use our direct-to-store model to take some volume and pressure out of their distribution centres.
“We also worked very collaboratively with retailers on rationalisation. We all had to think about things in a different way. In that hoarding phase, we didn’t need 13 different types of chicken sandwiches, we only needed two; or we didn’t need 25 different types of cooking sauce, we only needed four, for example.”
Kevin also explained how Greencore had looked ahead and prepared for the worst. “80% of the world’s garlic comes from China… and whilst we had enough to keep us going for six weeks, we knew we’d need more before the crisis fully hit. So we went to Europe, and were able to buy some European volume. Similarly, we worked closely with our continental cheese and meat suppliers in the run-up to lockdown. We knew it would be hard for them to get their product out of Europe, so we collected it and froze it before the situation got too bad.”
Months after the crisis first took hold of the nation, we are now entering a new phase of rebuilding and reactivation. As lockdown restrictions begin to ease, food businesses and retailers are having to make predictions about what the consumer landscape will look like in the new normal. I wondered what considerations were being made at M&S and Greencore?
“For M&S, our primary concern was to serve our customers in the best possible way, ensuring we implemented all physical distancing guidelines for both our colleagues and our customers whilst at the same time, give customers the best service possible. Those early few weeks were extremely challenging because as I said, our sales shape was significantly different, and we had to react with pace. But this has also given us an opportunity to reinvent and accelerate our Food transformation plan, one example being to increase our footage within grocery categories and attract more family shops. Like other food retailers, we’ve seen a massive increase in home cooking and home baking and while I’m sure that will drop off at some point, our whole supply chain has had to react to that trend.”
“This disruption will unwind and it will normalise… but people are going to consume in a very different way. The best example I can give you is of my father, who is 84 and online shopping for the first time ever. The pattern of behaviour towards online shopping will stay, and as food businesses we will have to think about our services and our propositions in a different way going forward.” – Kevin Moore
Kevin agreed. “This disruption will unwind and it will normalise… but people are going to consume in a very different way. The best example I can give you is of my father, who is 84 and online shopping for the first time ever. The pattern of behaviour towards online shopping will stay, and as food businesses we will have to think about our services and our propositions in a different way going forward.”
Stuart also talked us through some of the practical changes M&S has made to support the social distancing measures – which look set to stay in place for quite some time. “On the supply side, one thing we’ve done is change the times of our deliveries,” he said, “to make sure they arrive so our teams can fill up without too much customer disruption.”
I ask Stuart and Kevin for the key learnings they’ve taken from the past few months, or if there’s anything that has been pivotal to their success in keeping the nation fed during the crisis.
“The first thing that’s been really stark to me,” said Kevin, “has been our daily engagement with both suppliers and customers, which has massively ramped up. It’s taken a pandemic to do it… but in thirty years in the industry I’ve never seen people talking more effectively than they are today. Both formally – around demand forecast and ranges – and also informally, sharing advice.”
Stuart agreed, and noted the important role played by trade associations and the UK government during the crisis: “We’ve had calls with the government every week, as well as trade bodies like the IGD and the BRC, and on all counts we’ve been listened to and had very productive conversations.”
It is clear that Covid-19 will have a long-lasting impact on every element of the consumer-facing sector, and it was fascinating to hear how Stuart and Kevin think the crisis will transform supply chain operations in the future.
“I think there will be a deglobalisation of supply chains,” Kevin told us, “We are going to be more effective, I think, in establishing local supply lines. Stuart’s example about Italian pasta is a great one: I predict that, post-Crisis, we will be thinking much more carefully about what we can and can’t do locally… And what we can’t do locally, we’ll change. One of the reasons we’ve invested heavily in hydroponics is to get local supply chains to be more effective.”
I came away from the webinar inspired by the levels of dedication and creativity employed by food businesses during Covid-19. From altering product ranges overnight to making significant changes to keep colleagues and customers safe, I was blown away by the agility demonstrated by Stuart and Kevin’s businesses during a time of national crisis. It is truly a testament to their motivation and leadership, and the power of cross-sector collaboration.