Scramble for UK warehousing to stockpile goods as no-deal Brexit edges closer
London Briefing: Almost 3,000 jobs at risk at Patisserie Valerie as it is placed into administration
Workers pick orders at the PC World and Carphone Warehouse distribution centre in Newark, Britain. Parent company Dixons Carphone has outlined plans to keep its shelves stocked in the event of a no-deal Brexit. Photograph: Reuters/Darren Staples
Barely a day goes by now without at least one large UK retailer or manufacturer assuring customers – and the City – that it will have sufficient supplies to cope with the chaos of a no-deal Brexit.
On Tuesday, Dixons Carphone was the latest to outline its plans to keep the shelves stocked whatever the outcome of the Brexit negotiations.
“We are as well prepared as we possibly can be,” insisted the retailer, although it accepted the possibility of “some form of interruption” at ports in the event of a disorderly departure.
Dixons Carphone is the UK’s largest retailer of electrical goods and mobile phones, and imports the bulk of its products from Asia. It has been in close contact with its suppliers, and clearly believes its size will give it a big advantage in the event of shortages.
“We matter a lot to our suppliers,” said chief executive Alex Baldock. “To almost all of these suppliers we’re by some distance their largest customer in the UK. That translates into preferential treatment when it comes to being first in the queue for scarce stock.”
Reassuring for Dixons Carphone perhaps, but not such good news for their smaller, independent rivals.
As companies ramp up their Brexit plans, the UK is rapidly running out of storage space, according to the UK Warehousing Association. Three out of four warehouse owners say they are now full to capacity. And as demand surges from almost every sector, storage costs have surged by a quarter in the past three months.
Those companies that have yet to make plans to secure their supplies will either be turned away or face having to pay huge premiums to grab what space is left.
Among the supermarkets, Tesco has decided to keep overflow refrigerated containers, rented out for the Christmas rush, for the rest of the year in a move to boost its storage capacity at its larger stores.
Stockpiling is trickier for some industries than others, particularly pharmaceuticals and medicines, where warehousing facilities must be licensed and in any case are reported to already be full to capacity.
Food and medicine will clearly take priority, yet at Pets at Home, which sources almost 20 per cent of its supplies from outside the UK, chief executive Peter Pritchard has pledged the nation’s pets will not go hungry.
The UK’s largest retailer of pet supplies from dog food to poo bags, cat baskets and rabbit hutches, started stockpiling last year, and Pritchard says it is now considering spending an extra £8 million (€9.1m) to bolster its stocks of essential products.
That presumably doesn’t include the 170,000 dog outfits or 22,500 Santa hats for cats it sold to doting pet owners over Christmas.
Almost 3,000 jobs are at risk in the latest blow to the high street as Patisserie Valerie, the café shops chain, collapsed into administration this week.
The stricken chain, which has two branches in Dublin and a couple in Belfast, was plunged into crisis last October when it uncovered a £40 million black hole in its accounts.
This was blamed on “accounting irregularities”, but last week the crisis deepened when it revealed that forensic accountants brought in to go through the books had uncovered “significant manipulation” of its figures, including thousands of false entries into the company’s ledgers.
Since then the group has been locked in talks with its bankers. However, they have refused to stump up the financial lifeline needed for the business to continue.
It is an ignominious end for a business that has been a feature of London life since the Belgian-born Madame Valerie opened a cake shop in Soho’s Frith Street in 1926, with the aim of introducing Londoners to continental-style cakes and pastries.
When shares in Patisserie Valerie were suspended from trading last year the business was valued at £450 million. Now KPMG have been brought in as administrators to the 200-strong chain, and will realise only a fraction of that given that high streets are already awash with too much space.
Luke Johnson, the multi-millionaire entrepreneur who chairs the company and is also its biggest shareholder, on Tuesday night said he had personally extended an unsecured, interest-free loan to help meet staff wages for January.
In a statement the company said the loan would also assist the administrators in trading as many profitable stores as possible while they attempt to sell them.
It’s a sad ending for the 93-year-old chain.