British high-street retailers are gearing up for potential stock shortages as a result of the global coronavirus outbreak.
Industry leaders are predicting a “lot of disruption” from next month, as shipments of a wide range of goods to the UK are cancelled in the wake of factory closures across China, The Times reports. Halfords, Primark, Asos and DFS are among the big-name brands that may be hit in the coming weeks.
So how much of a threat does the Covid-19 virus pose to supply chains - and which products may run short across the globe?
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High street and fashion
According to the BBC, the £2trn global fashion industry brings the UK more than £30bn a year in revenues, while China accounts for 38% of the market.
But with expected delays in deliveries of new collections worldwide, and a spike in new cases of the coronavirus across China that has left shopping malls deserted, “the luxury goods industry is seriously worried”, says the broadcaster.
The Times reports that British clothing company Joules, which imports 90% of its products from China, is looking to shift manufacturing to Bangladesh and Turkey amid fears over supply problems.
Meanwhile, profit warnings have been issued to investors by high-fashion brands including Burberry, Ralph Lauren, Coach, Kate Spade and Capri Holdings, the parent firm of Versace, Michael Kors and Jimmy Choo.
“We’ve never seen a situation like this, where sales go to zero. And it affects everybody, whether you’re a big or small brand,” Flavio Cereda, a managing director at investment bank Jeffries, told the BBC.
“We’re looking at at least four months of very painful trading figures.”
Personal technology
“With China producing 80% of the world’s smartphones, the coronavirus is expected to cause a 12% fall in the number of handsets made in the first quarter of the year,” the Daily Mail reports.
Apple has already warned investors that it no longer expects to meet revenue guidance provided last month for the upcoming March quarter.
“Work is starting to resume around [China], but we are experiencing a slower return to normal conditions than we had anticipated”, resulting in iPhone supply shortages that will “temporarily affect revenues worldwide”, the company said in an investor update.
The Telegraph reports that Apple supplier Foxconn, which has 12 factories in nine Chinese cities, “does not expect even half of its factories to be running again until the end of February”, although the company has denied that claim.
Medicine
Politico reports that although the virus has not yet disrupted medical supplies in the UK, that is “almost certain to change”.
“While Europe is one of the world’s top manufacturers of drugs, the raw ingredients often come from China or India,” the news site says, adding that this dependence is a “source of alarm” within the European Union.
At an emergency meeting in Brussels this week, German Health Minister Jens Spahn warned: “We have seen there might be a possibility [of the] risk of shortages of supplies due to the coronavirus.”
Shortages have already struck in India, where more than 80% of the raw materials for the country’s pharmaceutical supplies are imported from China.
The Telegraph reports that prices of common drugs in India have “skyrocketed due to disruptions” caused by the outbreak. The price of paracetamol has already jumped up by 40% and common antibiotics by 70%.
Industry and manufacturing
Construction equipment manufacturer JCB last week became one of the first major British companies to feel the direct impact of the coronavirus epidemic, cutting production and working hours in its UK factories owing to a shortage of components.
And JCB may be the first of many.
Shortages of components have also “put the brakes on car production across the world”, says the Daily Mail.
Coventry-based manufacturer Jaguar Land Rover revealed this week that it has “had to resort to flying components out of China in suitcases” in an effort to stop its UK plants from closing by the end of this month, the newpaper reports.
Food
Food shortages are unlikely to hit Europe as a result of the outbreak, but countries in other parts of the world are being affected.
India is having to make up for a shortfall in rice production in China, Yahoo! News reports.
China also produces more than two-thirds of the world’s garlic, but the industry has been rocked by factory closures and a run on supplies among those who believe the pungent plant can help prevent the spread of the infection.
The Daily Mail reports that fears over shortages have also triggered panic buying in Indonesia, leading the government to reassure the public that 120,000 tonnes of garlic have been stockpiled.
