The relationship between suppliers and large retailers is the fundamental flaw that could bring about the demise of small retailers, said APPSSG’s report.
It said that the big four multiples were able to receive huge price advantages over smaller
competitors due to an abuse of power.
Although all four multiples were criticised for squeezing supplier margins, Asda was the only supermarket singled out.
Evidence from one source indicated that Asda forced suppliers to pay large sums for marketing and charged heavily inflated marketing costs for in-store promotions. APPSSG chairman Jim Dowd admitted that other suppliers had been reluctant to submit evidence.
Asda said that it was disappointed its submission had been omitted, as it had pointed out that it had collaborative working partnerships with suppliers and that a supplier would choose to pay for a promotion for commercial gain.
The APPSSG said multiples were able to abuse their power to get a price advantage of 10%-11% over wholesalers. If the unfair price gap continued, it would lead to more small store closures and catastrophic results for the wholesale sector.
John Murphy, DG of the FWD, said: “You cannot blame suppliers for the disparity in prices as they have got a living to make. But we are looking for the differentials to be fair.”
But Kevin Hawkins, DG of the BRC, said that the APPSSG had “overlooked or not understood the critical importance of scale economies in virtually every sector of a mature economy”.