Experts say second wave will bring empty shelves, but not because of panic buy

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As the pandemic continues to drastically alter the way Canadians spend their money, experts say a second wave of COVID-19 will likely see consumers in the throes of shortages – but this time resulting from ‘changes in fashion. of life ”rather than panicked shopping.

The early days of the pandemic saw toilet paper emptying from store shelves and some retailers are down again as cases rise, but experts say changes in consumer behavior over the past six months mean that long backorders are more likely to occur on discretionary items ranging from high-end stationary bikes to patio heaters.

The retail disruption is a sign of the COVID-induced cultural and economic phenomenon sweeping the country, as people work from home, shop online and rethink how they spend their time – and money.

But the disruption of usual buying habits has led to widespread inventory issues as the industry scrambles to meet changing consumer demand.

“The bottleneck will not be that people buy tons of toilet paper,” said Diane J. Brisebois, President and CEO of the Retail Council of Canada. “It will be the supply chain that tries to adapt to changes in lifestyles and discretionary spending patterns. ”

The problem is compounded by a drastic “chain change” from physical stores to online shopping.

Statistics Canada said in July that e-commerce retail sales reached an all-time high, reaching a record $ 3.9 billion in May, a 110% increase from May 2019.

The spike left many retailers scrambling to keep up with the trio of traditional home delivery, buy online and pick up in store, and pick it up curbside.

For many, the rapid pace of change has revealed an inventory management nightmare: orders arrive at the door or curb incomplete, delivery dates are revised in the distant future, or orders are simply canceled.

Jim Kilpatrick of Deloitte Canada said the pandemic has called into question the best practice of using historical sales and consumption data to predict future demand and guide inventory decisions.

“It has been really difficult to get an accurate signal about what products people want and in what quantities,” said Kilpatrick, the consulting firm’s global leader in supply chain and network operations.

As retailers and manufacturers become more nimble in responding to changing demand, he said the coming months will be tough again.

“We’ve seen a tremendous acceleration in online shopping,” Kilpatrick said. “It puts a lot of pressure on the system. ”

It can also create headaches for buyers.

Lynn Matheson ordered pants from U.S. clothing retailer Anthropologie in July.

But a few days later, she received an email informing her that the pants were out of stock and the order had been canceled.

“I’m normally a used shopper, but it was a really cool harem pants,” she said in an interview from her home in Lake Echo, Nova Scotia. disappointing. ”

While items like fireplace inserts and puffy harem pants may be hard to come by in the coming months, experts say groceries and essentials are in good supply.

“The food industry has been preparing for months for a possible second wave,” said Sylvain Charlebois, professor of distribution and food policy and director of the agri-food analysis laboratory at Dalhousie University.

“If there are more lockouts, the food industry is even better equipped today than in the first wave. ”

But that doesn’t mean shoppers won’t notice changes to everyday staples on store shelves.

Anna Petrova, vice president of supply chain at Kraft Heinz Canada, Canada’s largest food company, said the company has made some temporary changes to the product line it offers to maximize production of his most popular articles.

“Increasing supply to meet pandemic demand sometimes means that we have to limit the production of certain varieties,” she said. “We focus on the best sellers. ”

Manufacturers of products ranging from food products to toilet paper have temporarily limited the number of SKUs – or SKUs – they make. Moving increases production by limiting change – the process of converting a machine or line from one item to another.

Grocery store shelves will be well stocked with the original Kraft dinner, for example, while production of organic and cottage cheese varieties has been reduced.

“We are able to handle peaks in pandemic volume,” said Petrova. “We have worked very hard to create additional capacity to produce more products to satisfy Canadians. ”

Meanwhile, for people still concerned about toilet paper, don’t be, says Dino Bianco, CEO of Kruger Products LP, Canada’s largest manufacturer of paper products.

“Our assets are depleted and we continue to build inventory,” Bianco said, noting that the company – maker of the Cashmere and Purex toilet paper brands – has doubled its raw material inventory to maintain a 60- day inventory, instead. 30 days.

Yet Kruger is also focusing on key products. While consumers will find plenty of Cashmere-branded toilet paper, for example, Bianco said its recycled sub-brand EnviroCare might be harder to find.

“It’s a much slower movement, so we’ve decided to put an end to that one for now. ”

This report by The Canadian Press was first published on September 22, 2020.

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