Another day, another price war. Or so it feels. Great news for shoppers on a budget, terrible news for suppliers.

Another day, another price war. Or so it feels. Great news for shoppers on a budget, terrible news for suppliers. Ultimately, they are the ones who will be feeling the effects of retailers’ drive to keep prices down. Many retailers may be reading this and thinking ‘who cares’? After all, the competitive retail world has never been more so, and every retailer is doing all they can to attract and keep their customers. But just how much more of a battering can suppliers take?

Last week Retail Week revealed that Sainsbury’s is to launch its Brand Match price initiative across the UK. The news follows £500m of price-cuts by Tesco. And yesterday Asda kick-started a pre-Christmas price war on toys, with the launch of a TV ad campaign.

Of course, retailers will say there are many ways to reduce prices through greater efficiency, but in the end, it usually boils down to demanding greater discounts, lower prices and longer payment terms. 

It’s not just about price wars, either. Last week it emerged that Marks & Spencer is asking 60 of its suppliers to contribute to a £600m store revamp programme which amounted to 1.25% of their revenues. Jane Norman, meanwhile, has threatened to cancel or scale back orders. One fashion supplier said it attempted to cancel a quarter of a million pounds worth of goods which meant it would have had to close down.

Retail Week is always on the side of retailers, but it doesn’t always make good business sense to continually hammer suppliers. Will the suppliers always be keen to offer a great service or come to a retailer’s aid in a supply chain crisis if it’s a one-way relationship? Will they continue to innovate if they nothing left in the pot to innovate with?

And to look at it on a macro level, think of the wider economic repercussions of more suppliers going bust. They have already been dropping like flies in this recession as they’ve come under increasing pressure from their retail customers. Whilst retailers will of course say they have no moral allegiance to small businesses, keeping businesses of all sizes alive and well has a significant impact on the economic health and consumer spend of the country.

Every retailer is fighting for sales, but if price wars were a long-term solution to a retailer’s fight for market share, then it would make more sense. But in reality they are a short-term promotional tool that could have major long-term supply chain repercussions if – behind all the marketing hype - the suppliers are the ones who are taking the hit.