Chain reaction: The global

Will the global supply chain chaos ruin Christmas?

The Irish retail supply chain is under significant pressure due to Covid, issues connected to Brexit, and container and haulier driver shortages. Fionnuala Carolan asks how prepared Irish retailers are for the festive period ahead and what the solution is to this supply crisis in the longer term?

It’s been a bizarre few years for business by any standards and the ramifications of Covid are being keenly felt across the globe. A mixture of factors including worker shortages and port closures, pent-up demand for certain goods and a shortage of containers due to delays at ports, have all put the squeeze on supply chains. The supply chain has never had the opportunity to get back to normal since Covid restrictions have lifted and as a result, the price of shipping goods across the globe has risen substantially.

One of the most tangible clues that things were not ‘business as usual’ was when M&S announced last month that it won’t be taking orders from ROI customers for Christmas dinner this year; a clear sign that there is little trust in the supply chain as the retailer would not risk disappointing their valued customers. There is widespread talk of shortages of other Christmas essentials including food, wines and toys as well. The question is how will the bigger shops overcome these shortages in order to make the most of the all-important Christmas season?

According to an industry source, wholesale suppliers are predicting that they will be 30% short on what they’ve ordered this Christmas. For smaller retailers, it shouldn’t affect them too much but the bigger retailers, that sell a wider selection of Christmas products like decorations and gifts, will feel the pressure.

The majority of electronics, toys, and many other popular Christmas presents are rarely produced in Ireland which is why there is so much focus on the international supply chain when it comes to Christmas stock.

Reason for supply chain delays

Major port closures across Asia, including the closure of one of the world’s largest container ports in Shenzhen, China in early June for a few weeks due to Covid outbreaks, the massive delays that manifested because of the Ever Given shipping vessel being stuck in the Suez Canal in March for a week and a reduction in container capacity in shipping, have exacerbated these issues.

Ikea has become the latest retailer to warn on supply chain problems, saying in late October that stock shortages were likely to last another year. An Ikea spokesperson said: “Keeping Ikea stores and warehouses stocked has been a challenge. Supply chain disruptions led to a substantial drop in the availability of products that we have yet to recover from.”

Clothing brand Nike cited closures of factories in Vietnam for low stock and H&M is dealing with delays to deliveries across Europe. Clothing and furniture retailer Next said stock availability had improved since September but remained challenging, with delays in its international supply chain being compounded by labour shortages in the UK transport and warehousing networks.

According to Drewry Shipping, transporting a 40-foot container of cargo by sea from Shanghai to Rotterdam now costs 547% higher than the average over the last five years.

Companies are desperately trying to work around the higher costs. Some have stopped exporting to certain locations while others are looking for goods or raw materials from nearer locations, says Philip Damas, founder and operational head of Drewry Supply Chain Advisors. If solutions are not found, it can’t be long before these costs get passed on to consumers.

M&S is unable to offer its ‘Christmas Food

to Order’ service to customers in Ireland

Food shortages

Food products are equally affected by this. A delay in transporting coffee beans sourced in Asia is causing issues for coffee giant Starbucks and olive growers in Europe are now finding it too expensive to export to the US. Anchovies from Peru have largely stopped being imported into Europe because with the higher transport costs they’re not competitive

relative to what’s available locally.

Problems built up from the beginning of the pandemic have been compounded due to countries locking down at different times. A rise in container capacity is expected to relieve price pressures, but this is not expected to happen before 2023 so worries for this Christmas and beyond are very much warranted.

M&S Foodhall

When M&S announced that it was not offering a Christmas food ordering service for the Republic of Ireland this year, it was a clear sign that all was not well. The retailer told ShelfLife that it is due to Brexit issues, and it made the call early to avoid disappointment.

“Unfortunately, we are unable to offer our Christmas Food to Order to customers in Ireland due to the complex checks and delays resulting from Brexit meaning there was too much risk that we could potentially let customers down,” a spokesperson said.

When we asked if this was just for one year or if this spells the end of this practice for good, the group said it will keep this “under review”.

Despite not taking Christmas orders this year, M&S was keen to stress that all the Christmas essentials could be found in-store.

“Customers in Ireland will be able to get all their festive treats from our Foodhall, from the perfect turkey to vegetables from vegan centre-pieces to incredible desserts.”

Not wanting to worry customers, the retailer told ShelfLife that there is no need to panic buy because all the much-loved Christmas food would be available as usual.

“Customers do not need to shop earlier than usual but if they want to get ahead, they can already buy Christmas puddings, gin globes, mince pies, Irish Magic and Sparkle chocolates,” the spokesperson said. “All beauty gifts are in-store and Christmas gifting, decorations, family PJs, and of course the beauty advent calendar.”

Will customers be paying extra to have these products though? Not so, says the company. “Stock shortages have not led us to increase prices,” it said.

Tesco Ireland has said it is “working

closely with supplier partners to plan for

the months ahead, so that customers can

get everything they need”

Tesco keeping it local

Tesco Ireland says it is focusing on local products in order to avoid any possible delays from the UK and beyond. A Tesco Ireland spokesperson told ShelfLife that local sourcing from its 490 Irish suppliers is “at the heart of our fresh food and popular seasonal categories”.

Tesco’s spokesperson said that local sourcing has ensured it will be well stocked for Christmas, noting: “We have good availability of stock across other categories with deliveries arriving at our distribution centres every day, building our stock of ambient products in readiness for Christmas. We’re working closely with supplier partners to plan for the months ahead, so that customers can get everything they need.”

Meanwhile, SuperValu said it is “confident our customers will continue to enjoy access to their favourite ranges this Christmas” and Lidl is also sounding bullish about the forecast for December trading.

“Lidl Ireland does not foresee any stock issues at present. Our much loved Christmas range has already begun to arrive in stores and will continue to do so in the run up to Christmas.” However, according to Kevin O’Mahony of drinks distributor, Barry & Fitzwilliam in an article in the Irish Independent, people should buy luxury items like Dom Pérignon and Moët & Chandon sooner rather than later to avoid disappointment and cites a shortage of C02, which is used for some sparkling wines as one of the causes as well as transport issues. O’Mahony also says that there is a 35% shortage of New Zealand sauvignon blanc, due to a poor 2021 harvest.

Shop local

It would seem that Irish retailers are feeling confident about supplies or wanting the public to believe that in any case. However, if there are particular products shoppers desire, they would be wise to shop early to avoid disappointment and let’s face it, this can only be a good thing for retailers because once shoppers get the essential toys and wines they want, they will be sure to keep buying other non-essential products throughout December spurred on by the never ending stream of marketing from the big retailers.

Now more than ever, ‘shop local’ must have real resonance with consumers. Transporting goods around the world is not as easy or cheap as it once was which might just be a good thing for the planet and force us to consume products that can be made closer to home.

On the back of Cop 26, most people are more engaged than ever with climate action and encouragingly 81% of consumers believe buying Irish is important, according to research on a new initiative about safely shopping online championed by Guaranteed Irish and .IE

Bríd O’Connell, CEO of Guaranteed Irish said: “We welcome this initiative with .IE, which not only reassures consumers they are shopping securely but supports our local economy and communities and shortens the supply chain, which ensures less damage to our environment.

“Every €20 spent on a Guaranteed Irish gift this Christmas is worth €100 to the Irish economy. This helps our Irish producers, makers, and suppliers to keep trading while giving the consumer a feeling of solidarity in supporting our exceptional local businesses.”

Consumers may have to finally accept that we can’t always have fresh strawberries in December or avocados on tap, as there is a new normal coming down the line as we consider the wider implications for our planet of the items we consume daily from across the globe that we have taken for granted for so long. ■