More Gruel For Christmas 2021
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The gruelling run up to Christmas 2021 has been underway for some time. Many individuals, from tradebody spokespersons to retail CEOs, have been highly vocal about the challenges that businesses and shoppers face because of driver shortages. This is only one part of the Christmas puzzle. For businesses that rely on Christmas for a significant percentage of their revenue, the 2021 festive season remains shrouded in uncertainty.
The challenges faced by small and medium sized businesses are significant. Competing with big business for resources is a full-time battle. The shortage of drivers for deliveries of ingredients and the packaging to put products in has meant both have been delayed.
The lead time for some carboard has been three times longer than normal. CBI data shows the worst shortage of stock for manufacturing since records began in 1977. When McDonald’s runs out of milkshakes, the scale of the supply chain issue becomes clear.
The immediate solution has been the rush by haulage firms to offer recruitment or retention bonuses for drivers. These have had to be passed on in the form of additional charges of around 5% from hauliers who need to secure the drivers or pay agency drivers.
“Many food businesses are having to build a dedicated team to manage recruitment and incentives to attract and retain staff.”
It is not only logistics that doesn’t have enough people. Staff shortages due to a Brexit exodus and repeated waves of Covid variants are continuing to hamper Christmas preparation. Many food businesses are having to build a dedicated team to manage recruitment and incentives to attract and retain staff. This may address staffing shortfalls, but it is increasing overhead costs which will have to be passed on and will inevitably lead to higher prices at the tills.
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As Christmas gets closer, the demand for seasonal warehouse staff to pick and pack orders will rise creating another pinch point for SMEs. Amazon was offering a £1,000 joining fee for warehouse staff in September ahead of the busy Christmas period when many businesses move to 3 shift, 24 hour picking and packing operation.
Forecasting for 2021 is more difficult than it has ever been. The effect of the staffing and materials constraints has been to choke the economic recovery. The end of furlough six weeks ago also still clouds the picture. An estimated one million people could be looking for work who may or may not be willing to take up temporary roles in warehouses. A fifth of companies predicted they would make redundancies at the end of furlough, but early data suggests this swathe of job cuts has not happened.
The energy crisis remains a headache for businesses and homes alike. As temperatures fall, so has consumer confidence. The end of furlough, rise of food costs, soaring gas prices and the removal of universal credit top ups have brought significant pressure on UK households’ spending power. According to Deloitte in their September figures, confidence about household disposable income was down -9% to -21% quarter on quarter and -3% from the same point last year.
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Business and consumer uncertainty caused by the impact of Brexit combined with that of Covid-19 is showing no sign of let up. The Christmas 2020 grocery shopping demand profile was abnormal as small gatherings of immediate family traded up and treated themselves instead.
For Christmas 2021 planning, as cases of Covid-19 rise with some people returning to work and kids back in schools, it remains unclear how consumers, uncertain about the wisdom of larger gatherings and apprehensive about their own and the nation’s spending power, will shop. Will grocery remain as take home focused as in 2020 or will Covid fatigue,evident in the surge back to pubs, clubs and restaurants, mean an out of home festive season?