Whilst we’ve left behind the days of panic-buying, other factors such as conflicts, climate change and staffing crises have continued to leave supermarket shelves empty. A wave of new and unexpected challenges, combined with the rapid rate at which social media amplifies - and kills - trends has meant that it is harder for suppliers and retailers to stay one step ahead.

What are the challenges?

We’ve seen a number of challenges combine this year to cause major disruption across supply chains.

The war in Ukraine has not only disrupted production in and around the country, but the repercussions of sanctions on Russia have meant significant cost increases and put pressure on supply of products from other geographies. A reduced fuel supply from Russia has pushed northern Europe towards new sources of energy, further inflating prices.

Rising costs have impacted production of key components in the supply of food and drink sectors. This sector has already been struggling with CO2 producers lowering output, causing shortages of a number of products which rely on them and a reduced supply of  fertilisers (due to sanctions on Russia) causing agricultural disruptions. 

Another challenge that is more acute this year is the ongoing climate crisis - rising temperatures, low rainfall and increasingly unpredictable weather patterns have impacted both demand and the food grown and produced.

Add this to the impact that the pandemic has had on the redistribution of the labour force and staff shortages, alongside bureaucratic teething problems following the UK’s exit from the EU, there has been a myriad of problems for producers and retailers to contend with.

Not only have all these factors caused serious disruption to supply chains, but they’ve also been transforming consumer behaviour.

How does this impact consumer behaviour?

With current inflationary pressures and the cost of living crisis, the consumer loyalty that brands previously took for granted is being fiercely rivalled by the need for cost savings amidst tightening budgets. Now more than ever, retailers cannot afford to slip up.

A brand failing to get its stock on the shelves for a prolonged period leaves consumers looking elsewhere, whilst retailers who are unable to match demand will see an increased likelihood of customers heading to rivals.

According to ECR Europe & Roland Berger Strategy Consultants, 30% of consumers feel stockouts hurt their shopping experience. That means, in the short term, consumers are more likely to buy new brands and switch to a different retailer or even buy online, meaning in the long term stores will see a growing number of consumers switch to brands or supermarkets/ecommerce they perceive they can trust more.

What examples have we seen so far?

This year the UK saw temperatures of over 40°C for the first time since records began. The MetOffice predicts that the likelihood of extreme temperatures is increasing each year. As a result, many areas of the country have been declared to be drought stricken. Supermarkets started to see mass shortages of bottled water, with some retailers restricting sales volumes to make supplies stretch. Big brands such as Evian and Buxton were impacted as forecasts had failed to take this increase in demand into account.

Meanwhile, as Russia continued its invasion of Ukraine, a consequence that many consumers did not expect was a shortage of cooking oil. With Ukraine and Russia being major producers of sunflower oil, accounting for around 60% of world production, shortages began to rear their heads. Price rises, supply issues and out of stocks followed, with a battle to seek out alternatives at short notice.

As to chocolate lovers, getting hold of a Mars bar became a challenge as Mars Wrigley said that high levels of demand had left shelves empty across retailers, leaving consumers without a number of much loved brands.

Where does this leave the FMCG sector?

Many of these challenges have taken fast moving consumer goods companies and retailers by surprise. The current pace of change has meant that typical forecasting has struggled to truly keep track of an ever-changing world where the speed of changes in consumer behaviour now hugely outpaces standard predictive methods.

But what if there was a way for supermarkets to better prepare for changing circumstances, new shopping habits or potential stoppages in supply? The technology on offer, if we choose to harness it, can help retailers better prepare for these disruptions.

Artificial intelligence and machine learning can be leveraged to process large quantums of detailed data to predict consumer demand to within 5% - 10% of actual sales. It ensures that stock levels are optimal at the retailer level, and both stock write-offs and stock-outs can be avoided. Just as stock shortages can be damaging to a brand, so too can the money wasted on oversupply and unsold goods.  We use vast amounts of data, from weather forecasts to social media, to better understand how the future will look.

Enhanced sales intelligence in FMCG is more important now than ever before - utilising this will prevent these stockouts regardless of COVID, Brexit, inflation, the Ukraine crisis, monkey pox or the next thing to hit us. Today's technology allows speedy processing of data and is affordable for a vast range of retailers and brands.

Previously access to vast amounts of sales data would have meant hiring huge teams, and even then there would be a struggle to analyse and digest the data on a timely basis. With AI driven platforms like salesBeat, this data can be translated into powerful insights for retail & FMCG users in an instant.

By using micro and macro factors to model consumer buying behaviour we can see into the future and allow FMCG sales people who sell into supermarkets, distributors and wholesalers, or retail teams themselves, to maximise sales and minimise waste.