Will Tesco Lead the Way for Suppliers to optimize price levels
For all the bakers and buttery toast aficionados, there was bad news- Lurpak, king of butters, was spotted priced at £9.35 for a one kilo pack in one of UK’s supermarkets, and was selling in another at for £7.25 for a 750g tub. Adding to this, owner of pet food brands Whiskas, Dreamies and Pedigree have paused supplies to Tesco (UK’s largest supermarket giant) in a row over price rises. This comes amidst Tesco already in a dispute with Heinz, the baked bean, ketchup and soup maker, which paused supplies a week earlier in a dispute over price rises, thought to be more than 30%.
Rising inflation, price rise after Ukraine war, restricted global supplies, soaring energy and fuel prices as well as increased labour and transport costs are all adding to the growing strains for the suppliers to keep up with the optimum price levels. Therefore, we are now seeing these price shocks being passed to the end consumers, who is increasingly becoming reluctant to bear this brunt.
Tesco is attempting to use it’s standing as the UK’s largest retailer to head off price rises from suppliers and this has led to a public spat with suppliers that are famous household names. This spat could herald an era of more adversarial relations between retailers and suppliers as inflation squeezes both production costs and consumer incomes. It highlights the issue of whether manufacturers, retailers or consumers, who should bear the most pain of soaring cost inflation. With tensions building up in the overall supply chain systems, businesses are locked in extended price negotiations with their suppliers in order to curb the impact of soaring raw material costs.
One of the ways that can help minimise this impact is improved buyer-supplier relations through a supply chain finance program. Advance payments, access to tech driven programs, flexible low-cost facilities can further incentivise the suppliers to help maintain the optimum price levels. While the inflationary and global supply chain pressures will continue to remain, keeping oneself cushioned against these external shocks can help maintain an equilibrium in the buyer-supplier-end customer relations.
We at Alpha Bridge, understand the pulse and the dynamics of the rising tensions in the global supply chains. Our expert team helps businesses create a first mover advantage to cushion themselves against any supply chain shocks. Through our network of global lenders, we help businesses to create the right kind of financial opportunity.
While clearly the buyers don’t want the consumers to pay an inflated price for a product, suppliers are under pressure to keep up with the production costs and supplies in-spite of the soaring prices. If you are looking to cushion your business, then get in touch with us and we can help create an optimal solution for you!
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