Grocery suppliers expect next year’s trading to be even more competitive than this year as relationships with customers get tougher than ever. That’s the overwhelming view of the senior executives who sit on The Grocer’s suppliers’ reader panel. In particular, they are worried about the impact of soaring energy costs and their ability to recover these costs in a deflationary market.
One said: “With fierce competition among retailers to be seen as the cheapest there is likely to be even more focus by Asda and Tesco on the likes of Aldi. Price advantage will remain the most sought after prize, with manufacturers the inevitable meat in the sandwich.”
Another supplier told us that retailer efforts to reduce costs through initiatives such as ready packaging, NDCs, shorter delivery lead times and smaller drops were also impacting supplier margins.
There were also warnings that as suppliers got caught between soaring input costs and stagnant prices, more of them would go bust.