Supermarkets will increase pressure, warns former buyer

Supermarkets are likely to put even greater pressure on suppliers in a bid to cut costs in the current economic climate, a former Tesco buyer has warned.

Speaking at the Challenge of Rural Leadership Course, held by the Rural Business School at Duchy College last week, Michael Seymour said that large retailers are clamouring to retain customer loyalty and boost profitability. “The economic climate is tough, and everyone wants their pound of flesh,” he said.

“Tesco is obsessed by margin, Asda is more interested in market share, and Morrisons just wants cash. It has been very aggressive for the past 12 to 15 months and they will be hammering suppliers on price.”

Changing public demands mean supermarkets are having to adapt rapidly. Recession-hit consumers are trading town to cheaper food and eating in more, but are also concerned about wastage, the environment and local sourcing. Retailers are therefore moving away from buy-one-get-one-free promotions, often seen as wasteful, and seeking other ways to retain customers.

“Promotions are key to any retailer at the moment, as they attract footfall,” said Seymour, adding that supermarkets “are driven by numbers and are always looking to reduce cost.”

Pointing out that supermarkets still offer tremendous opportunities for growth, Seymour said that food producers must understand how multiples operate and add value by meeting retailers’ and consumers’ needs.

He said that quality and price were key, and prospective suppliers must know their market inside out. They should also consider their unique selling point, and be able to present to supermarket buyers with confidence, backed up by robust figures.

“Think about how the retailer will view your product. Be clear on what your customer and the end-user want – you can add value by focusing on their needs, as adding consumer value ultimately adds value for the retailer.”

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