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COVID-19

Toilet paper companies work to keep shelves stocked as shortage risk returns

Victoria Craig Nov 5, 2020
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Like in the spring, the problem this winter isn’t necessarily running out of product, but making sure it reaches shelves at the same pace consumers are buying it up. Christopher Furlong/Getty Images
COVID-19

Toilet paper companies work to keep shelves stocked as shortage risk returns

Victoria Craig Nov 5, 2020
Heard on:
Like in the spring, the problem this winter isn’t necessarily running out of product, but making sure it reaches shelves at the same pace consumers are buying it up. Christopher Furlong/Getty Images
HTML EMBED:
COPY

Kimberly-Clark has millions of toilet rolls on standby.

As England joins its U.K. neighbors and other European nations in tightening movement restrictions on Thursday, consumer products giants are more prepared going into lockdown, part two.

In the U.K., Kimberly-Clark’s Andrex — Cottonelle in the U.S. — is the most popular brand of toilet paper. Manufacturing levels at the moment are reaching 3.5 million units a day. Like in the spring, the problem this winter isn’t necessarily running out of product, but making sure it reaches shelves at the same pace consumers are buying it up.

“If our consumers want products, we’re trying to serve them,” said Ori Ben Shai, who’s in charge of the company’s U.K. operations. “We hope that by doing it, consumers will end up shopping more responsibly and more sensibly and not stock up more than needed. Whereas, if there’s a sense of shortage, they may have a higher sense of urgency.”

But, he said, as uncertainty about how long the coronavirus pandemic forces people to stay home (which inherently increases consumption) or forces countries to impose routine lockdowns, supply and demand will remain in flux.  

On the global edition of the “Marketplace Morning Report,” Shai told the BBC’s Victoria Craig what steps Kimberly-Clark is taking to prevent supplies from running out as people stock up.

Ori Ben Shai: We are working very, very closely with retailers. The biggest challenge is to just get the product fast enough throughout the chain down to the shelf. It’s not really to have enough product. So what would help is, part of it is having more inventory through the different stages of supply chain, in the stores themselves or at the retailer’s distribution centers, and with us as well. And then it is getting the right capacity to just ship it down the chain fast enough so it can stay as available as possible at all stages.

Victoria Craig: It’s a balancing act, though, at least financially, I imagine, for a company like you. Are you worried that if people stock up now, and they have enough for the next few months, they won’t be buying any the next period? So how does that affect your cash flow? How do you plan for that, what future spending will be like?

Shai: Real consumption is not really going up, or it’s going up to a limited extent. Fundamentally, there is a lot of stocking [up] going on. There is so much volatility. You don’t know for example, how long will this last? You don’t know how many more waves like that would happen. It’s probably going to be a cycle that we’re still going to be in. So very, very difficult to predict. We know it will be challenging, and we are probably modeling and changing our assumptions much more frequently over the last few months than we usually are.

Craig: Are you seeing sales like you did during the first lockdown? Are you noticing that people are stockpiling more than they otherwise would have at this time of year?

Shai: Yeah, there is a spike. It’s not to the extent that we’ve seen first time around during March, April. But yeah, it’s quite significant. I’d say it seems like people are a little bit less stressed than they were. They obviously went through the experience. They saw that product is eventually available. But, yeah, you’re seeing game behavior of stocking up to an extent.

COVID-19 Economy FAQs

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

How long will it be until the economy is back to normal?

It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.

How are those COVID relief payments affecting consumers?

Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.

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