Big UK retailers reveal coronavirus supply disruptions

LONDON, United Kingdom – Large UK retailers are suffering supply disruptions because of the coronavirus that is hitting sales, according to a survey Wednesday, March 4, that also revealed the extent of stockpiling by consumers.

“Retailers are battling against significant disruption to supply chains as the coronavirus has choked off production in China,” said Richard Lim, chief executive at Retail Economics, which produced the findings along with law firm Squire Patton Boggs.

“While the impacts may not yet be apparent on shop shelves, around a third of retailers suggested that ‘continuity of supply’ is currently their biggest concern.” (READ: China inflation rises as coronavirus disrupts supply chains)

Questioned on a number of issues by a cross-party panel of UK lawmakers Wednesday, the Bank of England’s incoming boss Andrew Bailey said companies would need to be helped over disruptions to supplies.

“I think it is quite reasonable to expect that we are collectively going to have to provide some form of supply chain finance in the not very distant future…to ensure that the effects of this shock from the virus are not damaging to many forms of activity.”

Bailey, who takes over from Bank of England Governor Mark Carney on March 16, singled out such help for small and medium sized firms, in a joint effort with banks and the UK government.

“We’re going to have to move very quickly to do that,” he told Britain’s Treasury Committee. 

Wednesday’s survey revealed that 52% of retailers have faced supply disruptions over the virus, while Lim later told Agence France-Presse that for businesses there was “a sense of worry, of anxiety over how long” the situation would last.

A survey spokeswoman said 30 retailers, including some members of London’s FTSE 100 stocks index of blue-chip companies, had given their finding over the past week.

‘Staggering result’

Almost one-quarter of the retailers, which together represent combined annual sales of $100 billion (90 billion euros) for food, fashion, and beauty goods, said there could be a “permanent change” to their business, including switching suppliers should the virus persist. (READ: Virus hammers garment industries in Cambodia, Vietnam)

“The most staggering result shows that just under 45% of retailers and those operating in the supply chain do not have the option to switch suppliers to mitigate against the impact of the coronavirus,” said Matthew Lewis, head of retail at Squire Patton Boggs. 

A total 45% of retailers have also experienced a “negative impact” on sales, the survey added.

Meanwhile, 39% of UK households are worried about product shortages, leading to 10% of consumers stockpiling, on items such as toilet paper, the findings showed.

On Monday, March 2, the IHS Markit UK Manufacturing purchasing managers’ index (PMI) revealed that the COVID-19 outbreak had led to the greatest lengthening of supplier lead-times for British firms in more than two years.

The 8-point drop in the Suppliers’ Delivery Times Index was the largest in its 28-year history. 

Playing down the concerns, Andrew Opie, director of food and sustainability at the British Retail Consortium, said in a statement Wednesday: “Disruption to supply chains has been limited, and the availability of products remains good. 

“Retailers are working closely with their suppliers and monitoring consumer behavior to anticipate changes in future demand. 

“Retailers are also taking necessary steps to meet the rise in demand for certain hygiene products,” Opie added.

Retail research company Kantar on Tuesday, March 3, said sales of hand sanitizer had surged 255% in the 4 weeks to February 23 compared with the same period a year earlier. – Rappler.com