Safeway’s marketing and trading director Jack Sinclair has warned that innovation may be stifled by supply chain initiatives such as factory gate pricing.

In an exclusive interview with The Grocer, Sinclair said he understood the sensitivities of suppliers about such initiatives and the reluctance of some to participate in them.

“We have a team of people looking at factory gate pricing and the opportunities that come with it. There are some shared synergies to be had if we can work very closely with the supply base on this,” he said.

Sinclair said he was uneasy about the fact that factory gate pricing favoured the big players. That could make it difficult for smaller suppliers to service retailers, resulting in fewer being prepared to take risks on new product development.

But he added: “From an economic point of view we can’t ignore this so we will be pressing on with some vigour.”

On the issue of open book costing, Sinclair said there was logic to such initiatives from a retailer’s perspective although he could not really see the benefit for manufacturers. But he said Safeway was keeping an eye on developments, adding: “We will not allow ourselves to be compromised on it.”

Sinclair also outlined Safeway’s irritation at having “to chase around Europe buying grey market goods” because suppliers in the UK continue to refuse to offer acceptable terms in some product areas.

Read the full interview in this week’s issue of The Grocer.

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