Supplying demand: Why UK brands should never break the chain
Consumers are creatures of habit. It’s at the heart of what makes retail sustainable for big brands and independents alike. Return visits and repeat purchases give you a reliable bottom line and the ability to forecast future earnings more accurately.
From customer loyalty and shopping trends, to brand advocates and social media influencers, there’s value in establishing long-term relationships with the people who love your products.
But while you’re building that buzz through your promotional activities, it’s important to keep your supply chain in mind. Without the right preparation, too much popularity can be a bad thing.
The strongest link
A weak link in your supply chain can lead to a breakdown in the sequence of repeat purchases by your customers – and that’s a chain that can be even more challenging to reforge.
MRM understand this. That’s why we not only provide promotional campaigns across a wide range of channels, but also back them up with logistics services including warehousing, storage, despatch and fulfilment, so your promotional items are never out of stock.
High-profile supply chain failures
Supply chain instability has become a common threat in the UK retail landscape over the past decade, costing British businesses an estimated £12.2 billion each year.[1]
A succession of geopolitical events has put logistics at risk, including:
- EU Referendum and Brexit (2016)
- COVID-19 (2020)
- Microchip shortage (2020)
- Suez Canal blockage (2021)
- Ukraine invasion (2022)
Shortages of materials, labour and affordable energy have all contributed to the crisis, while the rising cost of living has put consumers and businesses alike under previously unseen financial pressure.
Amongst all of this, there have been some headline-grabbing supply chain failures by household name brands in the UK, which show that nobody is immune to distribution disruption.
KFC closures (2018)
In early 2018, KFC switched supplier from Bidvest Logistics to DHL and QSL, triggering weeks of supply problems that forced some restaurants to close completely.
This is often reported as “the time KFC ran out of chicken” but it was more complex than that. With many ingredients delivered fresh multiple times per week, restaurants were forced to operate a reduced and unpredictable menu based on what they had been able to receive
Often there was a mismatch between the availability of ingredients and the packaging required to serve them: restaurants might have cold drinks, but no cups to pour them into.
A February 2018 tweet by KFC UK & Ireland summed it up: “We always had chicken, it was just stuck at the depot.”[2]
Despite a valiant and good-humoured damage limitation campaign, KFC’s accounts for 2018[3] revealed that the supply chain breakdown led to a 6.8% drop in same-store sales, compared with 3.8% growth in 2017 – a negative swing of over ten percentage points.
Tesco vs Heinz (2022)
Amid the turbulence of the immediate post-pandemic period, Tesco shoppers were once again faced with empty shelves when shopping for tinned food in 2022.
This time it wasn’t due to panic buying, but a price dispute between the retailer and the canned brand, which led to an absence of Heinz baked beans, soups and other products from the supermarket’s shelves.
A deal was eventually struck and Heinz products were once again stocked by Tesco but, as FMCG consultant Richard Kohn told the Grocery Gazette[4], such interruptions can give consumers the opportunity to try a competitor or own-brand alternative.
He said: “It’s a brave brand owner that pulls products from stores. These days, alternatives are abundant in private label and challenger brands, and brands feel this.
“Most consumers are switchers. At the end of the day, it’s truly a first-world problem if consumers need to choose between Heinz ketchup and the next best alternative.
“There are truly very few products where the difference from a branded option to the alternative is so extreme that a consumer will simply not buy the product.”
The Great Guinness Drought (2024)
Most recently, Guinness fans of Great Britain faced the prospect of Christmas being cancelled when it was reported that brand owner Diageo had limited supplies to pubs in early December 2024.
A spokesperson quoted by BBC News[5] said: “Over the past month we have seen exceptional consumer demand for Guinness in Great Britain. We have maximised supply and we are working proactively with our customers to manage the distribution to trade as efficiently as possible.”
The BBC noted analysis from CGA, which found that UK draught beer sales fell slightly in July-October 2024, while sales of Guinness were up by over a fifth in the same period.
It’s not clear how many pubs actually ran out of Guinness in the run-up to Christmas – although reports claim that some did – but the incident again serves as a reminder that popularity alone is not enough.
To capitalise on rising demand, you need to have the product, the packaging and the means of distribution to keep it in adequate supply.
Keep it quick and easy
The trick to improving customer retention is to be the path of least resistance: make it easier for shoppers to buy from you, and make sure the product is there when they want it, especially during price promotions when demand may be higher.
Of course, you can specify that an offer is only available “while stocks last” or “subject to availability”, but that doesn’t completely remove the reputational risk.
In fact, the ASA warns that when advertising a promotion, brands and retailers have an “obligation to do everything reasonable to avoid disappointing consumers”[6].
How to satisfy (nearly) everyone
It’s rare that consumers are unanimous on what they want from a brand, but that is what was revealed in a 2024 survey by Intuit[7], the brand behind platforms like QuickBooks and Mailchimp.
The survey was based on responses from 1,000 participants in each of the UK, USA, Canada and Australia, totalling 4,000 respondents worldwide.
It found that a near-unanimous 97% of people who shop from the same brand multiple times do so because that brand “makes it quick and easy to purchase”.
As a result, the report urged retailers to “remove obstacles that could disrupt customers’ shopping journey”.
Catering to UK consumers
The Intuit survey revealed what drives UK consumers’ buying intent when shopping from the same brand multiple times.[8]
Nearly three in ten (28%) said purchasing from the same brand repeatedly is just part of their routine, while a fifth (20%) said “I know the brand will be available” – yet another reminder of why interruptions to supply should be avoided.
This is particularly relevant in the UK, where consumers are more likely to have a long-term relationship with their favourite brands.
Intuit found 71% of UK consumers have stayed with their favourite brand for over two years, compared with 65% of Australians, 64% of Canadians and 59% of Americans. That puts the UK six percentage points over the global average of 65%.
This equates into increased shopping intent, too. Over a third (37%) of UK shoppers purchase multiple different products from their favourite brand, versus 31% of Australians, 29% of Americans and 28% of Canadians. Again, the UK is six percentage points over the average of 31%.
Fulfilling promotional promises
With a consumer base more committed to their preferred brands, but a climate in which switching is easier than ever, it’s important to take a joined-up approach to your promotions and the impact they can have on your supply chain.
At MRM we know this, which is why our multi-resource marketing approach is tailor-made to deliver reliable fulfilment, despatch and delivery even on high-demand campaigns.
To find out more about how to make MRM the strongest link in your promotional supply chain, contact us today.
[2]https://x.com/KFC_UKI/status/967027689080147968
[3] https://find-and-update.company-information.service.gov.uk/company/00967403/filing-history?page=2
[4] https://www.grocerygazette.co.uk/2022/07/01/tesco-heinz-empty-shelves/
[5] https://www.bbc.co.uk/news/articles/cx2v5z0wvwzo
[6] https://www.asa.org.uk/news/avoid-getting-caught-short-availability-and-ads.html
[7]https://www.businesswire.com/news/home/20240422270544/en/