Target News

COVID-19 Update

It’s part of our company vision statement that we make the world a better, simpler and more profitable place for our customers and partners.

As the coronavirus continues to spread, it brings challenges of how we continue to do that and protect our staff and customers from potential impacts.

You’re probably fed up with businesses sending coronavirus updates – especially any that try to use it as a sales or marketing tool. But I’m also conscious that we’ve been quiet on the issue so far.

I’m of the view generally that there’s no point in communicating unless we have something of genuine value to say. Three potential benefits swayed me towards deciding to share our thoughts with you today;

• To reassure you that we are taking all practicable measures possible to ensure we continue to supply our range of products with an uninhibited level of support and continue to prioritise the values we hold dear in our relationship
• To share our thoughts on likely impacts and latest information we have regarding the supply chain, and
• To share some of the steps we are taking that may help you in considering your own planning

Supply chain

It’s safe to say that, since many of us can work equally effectively from home, the main supply chain threats come in areas where you need staff to physically handle product, i.e. production and logistics.

We are hearing consistently positive news from China that factories are wholly or partially back up and running following the outbreak. There has clearly been a lag in production, mitigated partly by the timing of the outbreak in relation to Chinese New Year, but this largely seems so far to have been covered by existing inventories.

Demand has remained extremely strong throughout the outbreak so far, so the production lags are likely to feed through to a degree at some point. But if news from China continues to be positive, we don’t anticipate huge problems related to production.

A greater disruption may come from any impact on logistics in mainland Europe as countries increasingly go into lockdown and / or the outbreak creates staff shortages. It’s impossible to predict at this stage if, when or to what extent this will impact supply, but a significant proportion of products are or can be shipped directly from China to UK ports.

As long as there is product available somewhere in the world and functioning transport networks to get it to us (and from us to you) we are confident that we will continue to be able to source and supply products.

I obviously cannot guarantee that every product will continue to be available or that there will be no lags in supply, but we already have existing contingencies to mitigate supply-side risk as far as possible.

Pricing

We are already seeing increases in prices in some areas and there are rumours of significant increases in other areas thus far not affected. This shouldn’t come as any surprise in our channel – we’re all familiar with price rises in response to supply-side shocks, as we’ve seen in recent times with CPUs, hard drives, memory, VGA etc.

Price rises are, and will be, more widespread that some of the category-specific spikes we’ve seen in the past, but we’ve all experienced widespread price changes in response to significant currency rate shifts previously, e.g. in the aftermath of the Brexit referendum result.

Whilst prices are rising, it would be disingenuous to suggest you change your medium to long-term buying habits in response. There are too many unpredictable variables in play that affect anything other than short-term price movements. Put simply, whilst they’re rising at the moment there are factors that could kick in to make them fall, a couple of obvious examples being;

• Supply and demand (obviously) determines pricing. Supply side production issues seem to be resolving themselves but we don’t yet know the medium to long-term effects on demand. (I like to think if we’re all in lockdown or self-isolation we’ll all buy new PCs to while away the time or facilitate home-working, but maybe that’s just the optimist in me!). If demand crashes but supply is back on track, we would expect to see prices start to fall.

• Currency rates may move dramatically and quickly in response to changes, updates or announcements in different countries at different times, as we’ve seen recently with the UK position. If the dollar position significantly weakens and / or sterling strengthens we will start to see prices fall in the UK.

Our advice in terms of pricing is;

• Constantly monitor prices. In rising markets, prices can change rapidly and there can be wide variations between suppliers dependent on when they acquired the stock.
• Ask advice from distributors and vendors. Good suppliers should give honest advice about where they see prices going. But bear in mind, we don’t have a crystal ball – regard any advice as having relatively short-term relevance only.
• Reflect any cost price increases in your own pricing. I know many of you find this difficult, but in a rising market we all face the same pressures. You should avoid wherever possible absorbing price increases in your margin as it destroys your profits.
• If you can’t find the prices you need, shop around. Of course, I’d rather you bought everything from us (!), but in rising markets you will see large differences in prices between distributors and across different products. If you’re canny, you can use this to your advantage.
• Don’t speculate. By all means, where you see short-term opportunities, take advantage. But don’t assume that prices will necessarily continue to rise longer term. Remember that you don’t want to be overstocked when prices start to fall (as they inevitably will at some stage).

Steps Target is taking in response to the outbreak

Our priorities are to function as normally, to continue to service our customers and partners with no dip in standards, and to protect all of our staff.

Most of the things we do can be done equally well from home as from the office, so it will come as no surprise that we have widespread provisions in place for home-working. Initially, we anticipate this will cover primarily self-isolation and / or mild infection, but we have provisions in place to move everyone to home-working if and when necessary.

This will have no impact on our service to you. In reality you won’t even notice the difference; phone numbers, email addresses, skype etc will all be the same and staff have access to all the same systems they use on-site.

Of course, not everyone can work from home. We need to maintain our warehouse plus a skeleton staff to cover other essential on-site functions. We’ve introduced a number of measures to mitigate the threat and provide a safe environment for all our staff including;

• All common surfaces - door handles, hand rails, light switches etc – throughout the building are cleaned every hour
• Gloves issued to all warehouse staff handling product
• New procedures at goods-in including prohibiting delivery drivers from entering the building
• New procedures for customer collections – customers cannot enter the building (sorry!)
• New procedures for external visitors – essentially we won’t receive any external visitors unless they are assessed as both low-risk and business critical
• New procedures for customer visits – essentially we won’t make any customer visits unless they are assessed as both low-risk and business critical
• Forehead thermometers introduced for additional monitoring
• Additional measures introduced in kitchen and canteen areas including replacement of towels with paper towels
• Clear guidance issued to all staff on procedures including personal and workplace hygiene
• New procedures for self-isolation
• New procedures for isolating symptomatic staff on-site
• Consistent monitoring of the situation by management to continuously evolve our policies in line with changing circumstances

Our policy is fluid; that means that we’ve contingencies in place for every known / predictable potential outcome but fully expect new issues to emerge that need to be incorporated into the policy.

In simple terms, we’re as prepared as possible but we’re not daft enough to think that’s all we need to do. Things will change, and we will adapt our response accordingly.

Uncertain times …

These are, by definition, uncertain times; we’ve no idea how the virus will spread nor the wider impact on behaviour or economies. What we can guarantee is that – as always - we’re here to help, and will be throughout the coronavirus threat and well beyond. Our customers have supported us for 20+ years and we will always support you in return.

So in these uncertain times, whatever help or support you need or concerns you have, please don’t hesitate to reach out.

Best wishes as ever

Paul

Paul Cubbage, Managing Director

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