British Supermarkets Frame Rule for Panic Buyers; J Sainsbury Announces Special Timing Slot for Elderly

With lacs of cases reported in 2020 to date and spreading to countries across Asia and the world, the novel coronavirus outbreak has disrupted the activity in the markets, mainland China and Hong Kong and adversely impacted the economic conditions. Lower levels of business activities are being witnessed across the world. The businesses are continuously monitoring the development of the coronavirus outbreak and its impact on market conditions. Given the current economic scenario, the businesses are implementing stringent procedures in place to ensure smooth business operations and cover all related. However, it is not feasible now to quantify the potential impact of the outbreak.

Reportedly, the British Prime Minister, Boris Johnson has urged people to avoid social contact, especially to old age people, pregnant women or people with medical history to refrain them from public squares and mass gatherings. He asked people to avoid clubs, entertainment squares and other such social venues. In addition, he asked people to opt for work from home if possible. These measures will certainly slow the spread of this evolving pandemic. Till date, no cure has been found for this deadly pandemic; only prevention methods are being communicated to the public via various channels.

The situation has led to a panic-buying scenario, which is self-perpetuating and gets triggered by seeing people shopping in bulk quantities and empty shelves, as they believe it’s a fight to survival, even though there is no report of stockouts and food shortages.

Due to panic-buying caused by the Covid-19, the British supermarkets have imposed limits on essential items. Across the globe, hygiene and cleansing products sale have gone up, as the awareness of the Coronavirus has increased. People have started avoiding mass gatherings and public squares and are limiting themselves from going out, stockpiling the essentials for survival.

In view of this, most of the supermarkets in the United Kingdom have put restrictions on the quantity on the sale of essential items on categories such as food, medicines and hygiene products category to make sure everyone gets access to these essential items. The purchase limits are imposed on various items such as soaps & toiletries, food items like pasta and medicines for children. Most of the supermarkets are also imposing limits on hygiene-related, cleansing and anti-bacterial products for their buyers.

Amid coronavirus panic buying, J Sainsbury Plc (LON:SBRY) has come up with new shopping rule for the elderly, who will be given priority access to the essentials in the first hour of business operations of the stores. In addition, they will also get priority home delivery slots from the upcoming week.

The FTSE 100 listed retailer has its supply chain intact and unaffected, but these constraints are being imposed upon to make sure these items stay in stock for a longer time, and everyone has access to the essentials. The company would roll out special online food schemes for the elderly and helpless customers. The first hour of the day would be dedicated for the elderly/ vulnerable, while the rest of the people would be allowed from the second hour onwards. Furthermore, elderly people who are aged 70 years or more will be given priority access to online delivery slots.

A few weeks earlier, Tesco Plc (LON:TSCO), the market leader in the UK’s supermarket industry, implemented rationing on essential items. The intention behind such a move by the company was to provide access to the essentials for everyone. The company has almost stocked out its self-branded tinned tomatoes and pasta, it imposed limits (maximum of 5) on items which have high demand. These items include bleach, anti-bacterial wipes, cleansing solutions, water, medicines, tinned food items and other foods with long shelf life. These limits were implemented on both online and offline business models.

Retail Discounter, Aldi, was the among the first in the supermarket industry to put a cap (no more than four) on groceries when they visit the store. Ocado Group Plc (LON:OCDO) introduced virtual queues on online orders for existing customers due to high demand. WM Morrison Supermarkets Plc (LON:MRW) said that it would be recruiting 2,500 extra pickers and drivers to increase the number of delivery slots.

The UK supermarkets are working hard to keep supply chains intact for the essentials such as anti-bacterial products including hand sanitiser, long-life milk, toilet roll and tissues, pasta, tinned vegetables, cereals, cleaning products and pain relievers. Still, people are stockpiling and preparing for self-isolation amid fears of potential lockdown or shortages. However, this rise in demand is at similar levels usually seen at Easter or Christmas. As of now, for many of the online retailers, the normal expected delivery time is three weeks, from the date of booking.

Over the last few decades, the regular shops located on the corner of a local street, also known as corner shops, which have been largely overshadowed by supermarkets are back in demand, playing a vital role in serving the nation in the hour of need. These corner stores can be accessed easily by the elderly, people without a car, pregnant women and person with a disability. These independent grocery stores which stock only essentials (with a limited stock of paracetamol and cleaning products as per demand) and have long business hours have been doing brisk business, due to their huge network, consistency and accessibility when supermarkets are running out of stock.

Meanwhile, the British government had said that the supplies are sufficient and there is no need to stockpile. On the same time, Public Health England had asked people to prepare themselves to self-isolate for at least seven days and plan for the essentials.

(Source: Thomson Reuters, Comparative chart of SBRY v/s FTSE 100)

On 18th March 2020, at the time of writing (before market close, GMT 11:11 AM), J Sainsbury Plc’s shares were trading at GBX 205.60, which were 7.08 per cent up against its previous day closing price. Stock's 52 weeks High and Low is GBX 243.27 /GBX 171.19. At the time of writing, the share was trading 20.10% higher than its 52w low and 15.48% lower than its 52w High. Along with an annual dividend yield of 5.49 per cent, the beta of the company stood at 0.58, reflecting lesser volatility as compared to the benchmark index. The total market capitalisation of the company was recorded at £4,248.98 million.

The UK Supermarket industry is valued at around £150 billion. Customers have several options to choose from various products lines. Supermarkets sell all branded and non-branded products in most of the categories. Brands like Tesco (market leader), Aldi, Asda, Sainsbury’s have been leading the supermarket industry in the United Kingdom. Nowadays, technology is making shopping more convenient for customers. Most of the stores have also started online operations.