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02 February 2017

Is Tesco ready to be a supplier?

by Jennifer Sillars

Supermarkets have been the driving force in raising food and beverage quality, choice and driving down prices. Great for the consumer. Great for the supplier too, but it does take some work.

The merger of Tesco PLC and Booker Group plc was announced last week.

So, Tesco, on behalf of the independent retailers that are now your customers, are you ready?

  • Ready for our tough negotiations?
  • Ready to prove that your product is the best quality choice?
  • Ready to pay for the privilege of filling our shelves?
  • Ready to hand over rebates for hitting promotions targets?
  • Ready for our unannounced audits?

 

The merger has been hailed as creating the “UK’s leading food business”. Combining retailer and wholesaler expertise is a move not many were expecting. 

Expectations are high for the merger. Benefits such as better availability of products across shops and restaurants and cutting food waste were named in the announcement.

 

The UK’s leading food business is also intended as a help to independent retailers. That is a sentence that doesn’t signal a shift in power.

The real benefit to retailers

Better choice of food and drinks products will benefit smaller retailers. Choice and convenience are two consumer demands that are currently in the supermarkets’ favour.

The supermarket is more convenient because of the choice. It’s not more convenient to drive out of town to your nearest superstore, battle parking space wars and trolley rage.

It is convenient to know that you will find something you like. Consumers trust that supermarkets offer a variety not offered elsewhere. They also trust that products have been properly vetted. It is expected that only the highest quality products are allowed on the shelves.

Supermarkets do demand high quality, even in their value ranges. Their buying power ensures the costs aren’t too high for the customer.

Some independent retailers are also trusted to provide quality; often thought of as supplying fresh, quality produce that is better than the supermarkets. Usually the price reflects this.

Many independent retailers don’t have this reputation, through no fault of their own. How many of us nip in to the local shop on the weekend for snacks or emergencies but nothing else?

With access to a better variety of products with trusted reputations, perhaps the customer will see the convenience of popping in on the way home from work. The corner shop may be an option for dinner ingredients, not just crisps and chocolate.

This would help independent retailers, as the merger announcement promises.


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You may also be interested in Ideagen’s Best Practices in Supply Chain Quality Management 2017interactive report. Avoiding supply chain disruptions is only one area of possible improvement.

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