When the Prime Minister squeezed in an announced about lockdown two in between England v Italy in the Six Nations and Strictly Come Dancing on Saturday night, there was little evidence of the hidden impact that such measures will have on businesses in England.
But the British Beer & Pub Association were quick to the mark. Its Chief Executive Emma McClarkin said that the closure of pubs and bars will create “major disruption” to supply chain partners in the sector “whose businesses are now also at severe risk”.
The trickle-down effect of the soon-to-come and hopefully temporary closure of the hospitality sector and ‘non-essential’ retail will affect distribution to those sectors especially hard. No wonder the CBI Director General Dame Carolyn Fairbairn described a second national lockdown as the start of a “bleak midwinter” for many businesses.
The CBI states that the previous lockdown cost ‘non-essential’ shops £1.6 billion a week in lost sales; and with distribution operations and retailers ready to ramp up for the Christmas peak, these losses are certain to be much bigger. Not just for retailers, but for the 3PLs that support such volumes too. Deliveries will be suspended, warehouse shifts cancelled and inventory will increase causing backlogs throughout the supply chain.
With so much square footage of retail space closed, retailers will have a cash-flow issue and suppliers in the supply chain will be concerned. After concerned over supplier payments during the first lockdown in the Spring, Primark moved quickly yesterday to confirm that all orders placed with suppliers would be honoured, despite the anticipated £375 million loss from the prospect of the closure of 57% of its selling space.
Magnify that across all ‘non-essential’ retail (whatever that may mean) and the hospitality sector and English businesses will pay a heavy price for these measures. Not to mention the price that businesses in Scotland, Wales and Northern Ireland are already paying.
As a result, support for the public health measures outlined by the government on Saturday may wain. So far, logistics and supply chain has coped admirably in response to the measures to curb the pandemic but as they become increasingly punitive to the way that businesses trade that means that jobs will be lost faster than the booming e-commerce sector can replace them. Lost jobs will mean less support for the ultimate aim, to control and eradicate the virus.
In the rush to react to the scientific data the government has failed to address the trickle-down impact on the economy. Logistics and supply chain faces an uncertain month.