Written evidence submitted by the British Retail Consortium (BRC)(COV 0006)
1.1 The BRC is the major trade association for food retailers in the UK. Our members include all the major supermarkets, with the exception of Tesco PLC, many of the convenience store chains and food to go outlets
1.2 The BRC has played a key role before and during the incident in acting as a conduit between the Government and the food retail sector; supplying intelligence from our members, suggesting how regulations could be relaxed to maximise food supply and reassuring consumers through the media.
1.3 The comments made in this document reflect our views as at 9 April 2020. This incident has been extremely fast moving and challenging for all food retailers and it will be impossible to conclusively comment on all issues until it has ended.
1.4 The key points of our response are as follows
2.1 Consumer demand was completely unprecedented through most of March. The levels of demand have been more akin to Christmas buying levels but for a longer period of time and in some categories completely unprecedented
2.2 On top of exceptionally heavy demand there were peaks in buying where consumers reacted to Government policy in tackling the virus; particularly, when it announced schools would close and recommended tighter social distancing including staying at home and limiting shopping.
2.3 Retailers were always confident there would be sufficient food for the UK. Supply chains even from countries already with the virus had stayed open and manufacturers had been primed to increase production. The problem was meeting the unprecedented demand for this time of year, exacerbated by exceptional spikes in buying referred to in 2.2 above
2.4 Whilst retailers had a short period of notice observing consumer behaviour in Europe it was far too short to increase preparations for the sustained level of exceptional demand. For the busiest period of the year, Christmas, retailers have several months to prepare which they didn’t have in this case. There were also some products, such as hand sanitisers which are not held in large amounts and sold out quickly reinforcing the impression in consumers’ minds of wider shortages and encouraging more excessive purchasing.
2.5 Retailers have put a maximum limit on items bought by consumers at points through the incident but this was to ensure as many customers had access to products as possible. They were simply managing available stock in store not rationing.
2.6 The main problem was moving food through the supply chain quickly enough. Increased labour is referred to below, but in terms of deliveries, the Government reacted quickly to responses from the BRC and retailers to ease regulations which made a significant difference. Key to these were removal of delivery curfews to allow more flexibility when delivering to store and extension of drivers hours. Deliveries to store have significantly increased by up to 30% to meet consumer demand.
2.7 Online delivery capacity has also been boosted and continues to expand but it still remains a relatively small part of the grocery market, around 8%. The primary focus will continue to be stores and ensuring they have sufficient supplies for all customers, for their own purchases and where they are buying for those unable to leave home.
2.8 Demand slowed significantly in the week following the weekend of the 28th and 29th March. Consumers have become more accustomed to the rules on social distancing, they are shopping less frequently but buying more when they do shop.
2.9 Overall, we remain confident everyone in the UK will be able to buy the food they need. It may not always be quite the breadth of choice we are accustomed to but it means everyone will have access to a healthy, affordable diet.
2.10 We recognise there are many challenges ahead, not least the threat of increased absences in our workforces but believe the contingency plans retailers and their suppliers have combined with supportive policies such as the suspension of elements of competition law will ensure we can cope. The competition law suspension should allow arrangements to be made between retailers and suppliers to maximise food production and ensure sufficient access to food stores for every consumer.
3.1 Retailers recognised quickly they would need to increase their workforce, both to increase the speed and capacity of food passing through the chain and in stores. When making decisions on hiring they have accounted not only for the initial surge in demand but also for predicted absence rates, to ensure they can cope when their own workforce is impacted by the virus.
3.2 The Government’s decision early on to designate food industry workers as key workers has also helped by keeping absence rates as low as possible and demonstrating the important role these workers have to play.
3.3 There is a large number of workers available for retailers to recruit. Many of those from hospitality and other food industries have directly applicable skills and have complemented the existing workforce.
3.4 The main areas where the extra labour is needed is in warehouse and distribution, online delivery and in store, including those supporting online deliveries.
3.5 One issue which has taken a little time to resolve is the speed at which retailers can take on workers. This could be issues for those workers who have been furloughed or completing the normal checks employers are expected to carry out. At the end of March we saw some relaxation of checks and other guidance but it is a point to capture for future incident planning.
3.6 The other guidance which has been slower to secure is guidance for workers in the food industry in terms of adhering to social distancing and how they are protected at work. It has taken some time to secure advice on workers in high hygiene production facilities and the effectiveness of PPE for store workers. Retailers took steps immediately on social distancing to protect consumers and staff but the lack of clear guidance on face masks has inevitably driven requests for their use by workers. Retailers are acutely aware of the need to reassure their workers and ensure maximum attendance and the lack of clarity means they have adopt practices to meet demand from workers rather than basing them of scientific advice from Government.
3.7 Retailers have worked closely with their suppliers to monitor absence rates and potential impact on supply. To date the levels of absence are not impacting production. We are, however, keen, to see the plans Defra has agreed with the NFU to ensure sufficient labour for UK seasonal production of fruit and vegetables. Retailers will shortly switch to primarily UK production of salad vegetables and soft fruit so it is important to ensure the robustness of this part of the supply chain.
4.1 Retailers knew there was sufficient food in the supply chain for everyone but recognised getting that to the homes of the millions of vulnerable consumers who would need to self isolate was the challenge and raised this early in the incident with Government.
4.2 Initially there was a misconception within Government of the capacity of online delivery to meet the requirements of those self isolating. However, not only is the capacity limited (around 8% of grocery sales) but the data was not available to identify where all the vulnerable consumers are. Our messaging from the start was that we needed community solutions to supplement an increased online capacity; neighbours, relatives and volunteers to shop on behalf of vulnerable consumers and deliver to their homes.
4.3 Identifying vulnerable consumers has not been straightforward. At the beginning of April the Government shared a list of those consumers in the shielded group, who had been advised on clinical grounds to self isolate, and wanted to have online delivery. This allowed retailers to match them to their records and prioritise them for delivery. However, there has been a further delay obtaining data on similar consumers in the other UK countries. Finally, local authorities are collecting details of consumers outside this group who may be self isolating. So at this stage it is not possible to identify all vulnerable consumers.
4.4 However, even once identified, online delivery cannot be the answer for every vulnerable consumer, there simply isn’t the capacity. The retailers have been working with Defra, the devolved nations and the NHS to resolve how those buying on behalf of vulnerable consumers can pay for goods in store.
4.5 Retailers and Government have moved extremely quickly to find a solution which means the vulnerable person can have goods bought on their behalf in any retailer and limits their exposure to fraud. There is also the option for a third party such as local authorities to buy food on behalf of vulnerable consumers where appropriate.
4.6 Retailers have created a range of options, including vouchers which can bought online or over the phone and prepaid cards which the volunteer can use in store to make a purchase. By using these it avoids the risk of the vulnerable person needing to give their bank details and limits the amount which can be spent in store. Using a range of options also means food can be bought in stores in all locations, including rural areas.
4.7 We believe, therefore, through a combination of increased, targeted online deliveries and methods for relatives, neighbours and volunteers to shop on their behalf all vulnerable and self isolating consumers will have access to the food they need.
4.8 Finally, retailers continue to reiterate that access to food applies to everyone in the UK, regardless of location. They are committed to ensure rural locations are as well served with deliveries as urban areas. They do not prioritise one community over another.
5.1 The UK grocery market is amongst the most competitive in the world, delivering high quality, affordable food to consumers. We have seen nothing in the incident that has changed the competition between grocers and the benefits that delivers, particularly to lower income consumers who spend a higher proportion of their income on food.
5.2 Whilst there may be some pressure on the supply chain over the coming months, particularly due to measures to cope with labour problems, we do not anticipate a significant impact on food prices.
5.3 In terms of foodbanks, retailers were very clear from the beginning of the incident they would continue to do everything they could to continue to support them.
5.4 There was a decline in food available to foodbanks from stores, either short shelf products distributed locally and donations in store from customers. However, that is only a small part of the overall donations to foodbanks and has increased since demand has settled down in the last week.
5.5 Retailers have been working with the Institute of Grocery Distribution (IGD), food manufacturers and key distributors to foodbanks to ensure food continues to be delivered from the main source of donations, food factories and distribution hubs. Unfortunately, as with the whole supply chain there has been some disruption due to the pressure on logistics and immediate availability of ambient products such as tins and pasta but we are hopeful this is now returning to normal. Retailers are also supplementing this through additional funding for food banks and organising collections from consumers in store.
6.1 We are aware the Covid 19 Emergency Act contains powers for the Government to request information from the supply chain on the availability of food. We do not, however, believe this will be necessary as retailers had already agreed to supply Defra with regular updates on availability
6.2 In the run up to a possible no deal Brexit in 2019 major retailers had worked with Defra to agree reporting on a range of staple goods. Before the incident that protocol was reinstated and retailers have been reporting daily on stocks. This has been supplemented through a number of direct requests and conference calls where retailers have supplied more information
6.3 In our view the Government has had sufficient information on the availability of food. The BRC used the information as the basis of its messaging at the start of the incident to reassure consumers everyone would be able to get all the food they needed.
7.1 The response from Government to support retailers has made a difference, not only the immediate changes to regulation to increase the speed and scale of deliveries but also measures to help should the situation becoming more challenging such as relaxing specific elements of competition law. Defra, in particular, has handled the incident extremely well, giving us the maximum support from the Secretary of State through hundreds of officials who have worked with us tirelessly over the last month. We have also had similar support for colleagues and retailers in all the devolved governments.
7.2 There are, however, a couple of issues which have not helped and have, at times, proved distractions from the necessary focus on feeding the nation. The first is misunderstanding the capacity of online delivery. Online is important and has been scaled up since the start of the incident but was never going to deliver the volumes necessary. We recognised this from the start and called for community solutions making the most of stores alongside online but it took some time for Government to recognise that.
7.3 The second point is co-ordination across government and governments. Decisions on how volunteers could buy on behalf of vulnerable consumers seemed to be taken in isolation with no understanding of how supermarkets work. Similarly, clarifying who online retailers should be prioritising and the data needed to identify them has been a difficult process. Finally, there have been times when action would have been quicker and easier to make if all 4 UK countries had been involved in the discussion and ready to make the changes to regulation and policy at the same time.