BACK OF STORE – Facing up to a cold climate

Welcome to The Grocery Trader’s first quarterly Back of Store feature of 2015, filled with the latest stories from the leading suppliers of warehouse and logistics equipment, solutions and services for supermarkets, Co-ops and convenience store chains.

chazThe first month of the year is behind us, and we are over the Christmas/New Year stresses of keeping the supply chains filled and the shelves stocked with products, plus the extra burden of the oversupply of festive products and returned gifts. That said, for anyone involved in the supply chains serving the UK multiple grocers, this is a challenging time.

People working in cold stores know how to deal with below zero temperatures and have protective clothing to enable them to cope. But for the rest of the business at this time of year the frost and cold bring new, unwanted challenges. Our roads and motorways are either icy or snowy much of the time, and the treacherous conditions lead to increased numbers of accidents, which bring traffic to a standstill. And when trucks do get through, there’s ice on the roads and on the walkways in distribution centres and stores’ goods in areas. So trucks are delayed coming in and out because of the road conditions, and there’s even more reason for caution, both for staff moving around on foot and forklift operators wanting to work at speed.

The weather is always with us. But the bigger challenge for the multiple retailers’ supply chains come from the changing business climate, and how the major retailers deal with it. As far back as November City analysts Goldman Sachs said they believed the major food retailers need to close one in five shops to reduce their cost base and turn round their performance. The analysts said that the problems are due to the pursuit of short-term profit growth in the face of deep structural shifts. Put bluntly, the analysts believe Tesco and Sainsbury in particular have too many stores to carry on as they are, on top of which we are witnessing the slow decline in sales of large out of town stores and the effects of consumers moving away from a weekly big shop at a big store to several trips per week.

However the supermarkets respond to this changing climate, clearly they will have to restructure their warehousing and logistics arrangements at local level in line with their changing supply chain requirements. We look forward to bringing you news from the suppliers about how they are working with their retail customers to help them meet the challenges.