from Grahame Smith, Executive Coaching, Exmouth, Devon
Sir; The two articles in your October 4 issue on trade investment and innovation indicate how wide the gulf is between suppliers and retailers.
The Saturday Essay by Tony Smith of Unilever Bestfoods UK (p30) emphasised the dangers of deflationary pressure on innovation and the need to address the factors acting to reduce the value of the products we sell.
He maintained that supporting retailers to fund price reductions is a reality of the competitive market but we must not allow it to go too far.
The news item (‘Spend pays for infighting’, p4) concerning trade investment reported that many suppliers believe that levels will increase in the coming 12 months.
How long will it be before a big multinational, global supplier says enough is enough and replaces words/essays/ debate with its own retaliatory action?
When will we hear from a major retailer that a big supplier has significantly reduced price funding, has cut back support for a category, or reduced discretionary funding because the retailer will not enter into a win/win agreement?
Not very likely with the share of trade each retailer holds of the big suppliers’ business.
In my view, there should be a much better understanding of the effect of deflationary pricing on the future of brands and categories by both parties.
Otherwise, we will see a reduction in true manufacturer-led innovation, a rapid growth in own label brands, and categories languishing in very low or negative growth.
Inevitably, this will lead to low or negative profit growth for retailers and suppliers alike.
Understandably, all parties are reluctant to broach these issues publicly.
I hope The Grocer can get some valuable debate going. This must not be brushed under the carpet any longer.
Sir; The two articles in your October 4 issue on trade investment and innovation indicate how wide the gulf is between suppliers and retailers.
The Saturday Essay by Tony Smith of Unilever Bestfoods UK (p30) emphasised the dangers of deflationary pressure on innovation and the need to address the factors acting to reduce the value of the products we sell.
He maintained that supporting retailers to fund price reductions is a reality of the competitive market but we must not allow it to go too far.
The news item (‘Spend pays for infighting’, p4) concerning trade investment reported that many suppliers believe that levels will increase in the coming 12 months.
How long will it be before a big multinational, global supplier says enough is enough and replaces words/essays/ debate with its own retaliatory action?
When will we hear from a major retailer that a big supplier has significantly reduced price funding, has cut back support for a category, or reduced discretionary funding because the retailer will not enter into a win/win agreement?
Not very likely with the share of trade each retailer holds of the big suppliers’ business.
In my view, there should be a much better understanding of the effect of deflationary pricing on the future of brands and categories by both parties.
Otherwise, we will see a reduction in true manufacturer-led innovation, a rapid growth in own label brands, and categories languishing in very low or negative growth.
Inevitably, this will lead to low or negative profit growth for retailers and suppliers alike.
Understandably, all parties are reluctant to broach these issues publicly.
I hope The Grocer can get some valuable debate going. This must not be brushed under the carpet any longer.
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