Analysts Unhappy With Morrisons’ Price Cuts Scheme
By Laura Elliott.
UK retailer Morrisons has ruffled the feathers of both city analysts and suppliers by implementing a controversial price-cut strategy designed to achieve millions of pounds worth of buying discounts as quickly as possible. On June 18, the chain gathered together hundreds of its suppliers with the purpose of sourcing a greater volume of products from fewer suppliers in order to increase efficiency.
At the time, suppliers complained that the supermarket giant was seeing discounts to the tune of “half a million pounds” from each of them. It has now become clear that the Morrisons’ suppliers are looking to put new trading terms and product ranges in place urgently. As reported by foodmanufacture.co.uk, one-to-one meetings between Morrisons’ buyers and suppliers are already underway to discuss the finer points of the new deal.
One anonymous supplier said that “They are trying to keep the City happy. They want a quick improvement in their graphs for the quarter, but I can’t see anything behind that. Strategy just seems to be all over the place. It’s confusing”.
One analyst, Philip Dorgan of Panmure Gordon, commented that “This is the sort of thing people do when they are struggling, trying to get fewer suppliers and better buying terms. Suppliers often cave in, but it may cause more problems than it’s worth, it can also reduce choice for consumers. You can end up throwing out the baby with the bathwater”.
Another supplier went so far as to claim that the retail giant would find that it has lost the trust of its suppliers, if it continued down this road.
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