Supermarkets' power threatens suppliers

Published: 23 July, 2008

UK: High profile drink companies contribute to survey highlighting supermarket supplier management tactics.

Almost 60% of suppliers have no notice period in respect of their supply agreements, meaning that supermarkets have few, if any, obligations if they were to de-list them.

41% of respondents claim to have a notice period in place; however, for half of these it's purely on a verbal basis. Those with a notice period claim it is 14 weeks.

Over the past three years, almost 80% of suppliers have been subjected to supermarket pressure to drop their prices. Suppliers stated that their products are now sold on average 8% compared to three years ago.

Between 0 and 25% (average of 4%) of suppliers' gross sales value is contributed back to supermarkets in the form of volume over-riders, discounts, promotional and marketing contributions and any other payments, the survey said.

Almost a third (28%) are seeing the request for supplier contributions increase - for 64% it's staying the same.

"Solutions to the major financial distress caused by the market power wielded by the major multiples on the supply chain have yet to emerge," Swift said.

Printer friendly version