Are you aware of the high drama around Tom’s sausages? Fans have been taking a lot of interest in them as the subject of some tough supermarket negotiations on Radio 4’s The Archers.
In a line straight out of a BRC interview, the store buyer promises bigger sales volumes will make up for the impact on margins of a low-selling price.
But, departing from the familiar abuse-of-power script we usually face, one member of the two-man sausage-making partnership is actually keen on the deal.
He clearly recognises the benefits of access to big numbers of customers, marketing budgets and the experience of thousands of suppliers who have built up their businesses with the help of retailers.
Mind you, I wouldn’t bet my licence fee on the word ombudsman remaining unmentioned. Remember last year the grocery market inquiry found robust negotiations between suppliers and retailers are a positive element of our markets that benefit customers, but still went on to tell retailers to set up one of these costly, bureaucratic empires to monitor and control the supply chain.
A survey the other week by the fair-trade group Traidcraft claimed 80 per cent of customers want an ombudsman. I suggest they have fallen for supplier group propaganda. They don’t realise we already have the Office of Fair Trading and an extended Code of Practice overseeing these relationships. They certainly haven’t understood the impact of a costly regulator on the shop prices they pay.
At a time when voters really feel their finances are under the cosh, we wait to see what Government’s next move is.
But this isn’t just about food. We should be proud of what strong business negotiation does to improve every part of all types of supply chains.
Retailers are nose to nose with customers every day. Their buying departments have the shrewdest understanding of what delivers value for customers and what’s just an extra cost. The till quickly reveals whether a new feature is adding value or just putting up the price. That guides suppliers to achieve the balance of specification against price. Good news all round.
Here’s an example from my time at B&Q: those motion-sensitive security lights used to be specialist and expensive. We helped develop them into a mainstream product that could sell at just under a tenner. The result? More sales, delighted suppliers, happy customers and probably more thwarted burglars.
It’s nonsense to say retailers don’t care about suppliers. They depend on them. Retailers have shops, staff and a brand, but without suppliers what would be on the shelves? Not a sausage.
Stephen Robertson is director-general, British Retail Consortium