Seeking a sunstroke of inspiration

20 August 2003
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21 August 2003

This summer's record-breaking temperatures have put retailers and their supply chains under severe pressure. Robin Parker asks how they can cope next time

It might seem churlish to complain about the Mediterranean climate we've been enjoying recently. Only the bookmakers forced to pay out thousands of pounds to people who took a punt earlier this month on the UK basking in temperatures of 100 degrees and more have the right to bear a grudge.

For many retailers resigned to the typical ups and downs of the summer months, when shoppers traditionally shun high streets and leave the UK for foreign climes, it's brought an unexpected boom. As our news story shows, everything from beer and barbecue food to sun cream and cooling fans flew off the shelves at record rates.

Anecdotal evidence at shop level reveals that some essential items didn't even make it as far as the shelf, with customers snatching them straight from trolleys as they moved from warehouse to shop floor.

No supply chain director would think twice about upping their order for more cans of soft drinks. Although three times as many lines are sold in July than in the winter months, they are still a shopping basket staple that will always be snapped up in in-store promotions.

But it's a different story for many summer lines. British weather is unpredictable, making it hard to forecast when leftover sun creams and fans will be needed again. Long lead times, often from cheap production bases abroad, complicate the matter. Moreover, because they meet such specific needs, no amount of heavy discounting in the winter can force reluctant shoppers to buy them.

Sold-out products risk exposing shop staff to hot and bothered customers, unable to cool down because the means of doing so are unavailable. One north London supermarket, sensing growing unrest and tired of repeating the same stock phrases, printed stickers for staff that read "No fans left".

Protecting the business in this way requires quick thinking and such welcome surprises as a burst of hot weather can cause as much of a supply chain rethink among retailers as troubling disruptions such as the foot and mouth crisis or cuts in the inflation rate.

This requires lateral thinking, says Chris Saumby, general manager of forecasting at supermarket chain Asda. "Where products may have come in short supply, we've tried to make sure they go to the right stores to meet customer demand," he says. "We split the country into climatic weathers and we'll alter our strategy accordingly."

It all adds up to a far more complicated picture for those charged with planning the production and distribution of many goods. Manufacturers of summer products need to weigh up just how often a hot dry spell, such as we have seen this month, will actually occur before increasing capacity. The signs are that this has not been a one-off, and buyers, and ultimately consumers, can be sure that any increase in cost that this causes will be passed on to price of the end product.

Worse still for suppliers are the endless in-store promotions typical of the UK's cut-throat retail sector. Marketing logic suggests "buy one, get one free'" is always a more tempting option than any other, ensuring more bulk buying than price cuts on individual items ever could. This, coupled with stronger than ever health initiatives on the use of sun cream and the consumption of water, chips further away at stock levels and further tests suppliers' mettle.

Supermarkets also have to weigh up the impact on smaller suppliers, as the pace of demand dictates even greater priority to high-volume brands than usual.

But buyers of these goods should spare a thought for sellers who specialise in less seasonal products. Whereas in the average summer, many shoppers would be expected to buy ahead for the winter, in extreme weather, shoppers can barely see beyond the next sunbathing opportunity, leaving supplies to gather dust on their shelves.

Managers at branches of winter goods chains such as The Edinburgh Woollen Mill told staff to go home early after stores were stripped of their few summer lines. And even before the latest heat wave, bakery chain Greggs blamed slowing sales on unusually good summer weather, as consumers shunned its range of hot pies and pastries for ice creams.

For stores such as this, it is perhaps best to know when the weather has beaten you and pray for a turnaround in the colder months.

SMaug2003

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