31st October. A date that frightens children with all the ghostly and spooky goings on of Halloween. But this year, 31st October is set to scare another group of people – retailers. Will Brexit deadline day v3 be a Treat or will it be tricky for retailers?
Both of the remaining candidates to replace Theresa May have promised that they will deliver Brexit by the deadline of 31st October – one way or another, with or without a deal. This has filled retailers with fear of stock shortages that will impact their sales in the golden quarter – a time period that more than often delivers majority of a retailer’s sales and profit and decides the health of their full year financial performance. In the past week, the CEOs of two of the ‘Big 4’ supermarkets have voiced their concerns about the looming deadline date of Brexit and how crashing out of the EU without a deal could have significant impact on their supply chains and lead to severe stock shortages and impact sales. But they’ve been in this position before, so what’s different this time?
The Golden Quarter contains two of the biggest seasonal events – Halloween and Christmas and for some retailers, a third – Black Friday. Supply chains are already stretched with the significant uplift in stock volumes moving through the chain. Retailers won’t have the same luxury they had in March where they stockpiled significant volumes of non-food and long shelf life food products in anticipation of the UK leaving the EU without a deal. Stores, warehouses and ports will already be full of stock ready for the peak trading season so it will be extremely difficult to accommodate any additional stock in addition to ‘normal’ requirement. So, will our Halloween be less scary? Will Father Christmas run out of toys for our children and will we be having tinned turkeys for Christmas dinner? No, I don’t think so.
Halloween by and far should be unaffected – most retailers typically launch their Halloween ranges around late August/early September with 100% of the range launched by middle of September. Any stock requirement for Halloween should therefore be unaffected by the Brexit date. Christmas may be a different story – unless retailers carry out meticulous planning. Non Food seasonal Christmas ranges (Christmas decorations, gifts and Toys) are planned well over a year ahead with buy volumes usually confirmed to suppliers by January. Stock ships around July to arrive in the UK around mid/end August for most retailers initial Christmas range launch around early/mid-September. Whilst further stock is usually planned to continue arriving until early November, retailers have a couple of options to secure their seasonal Christmas performance.
1. Instead of bringing the stock in 3 or 4 phases, bring in all the stock in the early phases before 31st October
2. Review shipping routes for stock coming in from outside the EU – can the route be amended so stock arrives directly to a UK port without having to go through an EU port?
Whilst the above isn’t ideal and could affect stock cover and cash flow, it is a price worth paying to guarantee stock availability for peak.
But what about short dated food? There is no doubt that a very large proportion of food that is imported in to the UK is either imported from the EU or through the EU. A meltdown at mid-night of 31st October with the threat of the UK leaving without a deal could have unknown severe impact on the food supply chain – it’s difficult to plan for something that no one knows the outcome of. But despite this threat, I don’t feel that we need to worry about our stocking fillers or our Christmas dinner plates being empty. Branded confectioners, like retailers will have planned their Christmas volumes well in advance so there is unlikely to be a shortage of advent calendars, selection boxes or gold chocolate coins. When it comes to fresh food, the majority of the staples on a Christmas dinner plate is home grown – Turkeys, sprouts, carrots, potatoes. Even products such as mince pies and Christmas puddings are manufactured in the UK and these products are usually produced months ahead of Christmas and frozen so there will be an abundance of stock at Christmas.
I may be making the whole thing sound very simple. There is no doubt that the uncertainty of Brexit is causing a huge amount of anxiety for retailers – after all, retailers are creatures of habit. They like to plan, forecast and follow a structured plan. “Retail is Detail” as some in the industry say and possibly for the first time, retailers are not in control of their own destiny.
Planning for the Golden Quarter will be even more critical this year than years gone by. At 4C, we are experts in helping retailers plan and delivering successful seasonal events. For more information, download our white paper “Harnessing data to deliver a successful seasonal event”.