Tesco is investigating the impact of falling commodity prices on its suppliers in a bid to secure better deals and cut prices in-store.
Suppliers across a number of key grocery categories approached The Grocer this week having received emails from buyers informing them of the retailer’s intention.
The email read: “As part of our commitment to deliver for customers, we are looking at the role which commodity prices play in the cost prices of the products we buy. As you are aware, a significant number of commodity prices have been decreasing. Building on our relationship, we wish to inform you that we will be spending the week assessing whether we believe there are benefits which can be drawn from the commodity price movements across the products you supply us.”
The email went on to say that once the assessment had been made, Tesco would send suppliers supporting information for joint review “to assess whether there is any benefit to be gained for our customers. It is our aim for any new costs to be implemented on orders placed for 12 January 2015.”
However, some suppliers were not convinced any better terms Tesco secured would be passed on to shoppers through lower prices. “It seems with a £263m hole in the financials, Tesco is resorting to route one tactics and going after their supplier base to cover the gap,” said one.
Another added: “There are a number of commodities falling in price so its only natural that Tesco wants to see this reflected. What will be interesting to see is if customers see any benefit.”
The commodity price falls that prompted Tesco’s latest move include oil, sugar and wheat. “We work with over 3,000 suppliers across the UK and hold regular discussions with them on how to provide the best products and great value for customers,” said a spokeswoman.
The Grocer has also learned that Tesco had to postpone a grocery suppliers conference scheduled for this week as a result of the changes in its management team caused by the fallout from the ongoing £263m accounting scandal. It is understood the retailer hopes to hold the event after the new team has settled in.