Well, the cynical might say silly question, its all about lowest price. And indeed there's no getting away from the fact that supermarkets negotiate very hard - to put it mildly. But there are other factors which supermarkets take into account when deciding whether or not to work with a supplier.
According to the Institute of Grocery Distribution (and apologies for mentioning them again, but they do publish some helpful data), retailers' top requirements from their suppliers are as follows:
New product development and innovation, and consistently high service levels, mentioned by 72% of retailers questioned
Understanding the retailers strategic direction, mentioned by 67%
In depth understanding of the category and its future trends, mentioned by 61%.
These four requirements were rated well ahead of any others, with the next highest ranking, mentioned by 47%, being a need for suppliers to have dedicated teams managing the relationship.
It's interesting to see the emphasis put on innovation and understanding future trends. These skills are vital to retailers who are extremely competitive with each other, and all hell bent on attracting more shoppers and growing their business. Retailers recognise that price alone is not enough to do this.
The high priority given to service, ie having the right product on the shelf all of the time, is also key as nothing frustrates a shopper more than finding that the product they want is out of stock. Often they will either not purchase at all, so business is lost, or worse still go to another store.
The IGD also draws attention to the importance of an efficient supply chain, as this is a way for retailers to get costs down. However they can't do this on their own, and are more likely to support suppliers with whom they can partner in an effort to reduce supply chain costs.
So, for those thinking about dipping a toe in the supermarket supply water, its all about new ideas and the ability to implement them effectively with top class service. For those who do not deal directly with supermarkets, but supply processors or packers who do, its worth remembering that they are judged by their ability to innovate and supply efficiently. The producers who help their processor/packer customers either innovate or become more efficient may find extra profit in their pockets.
Showing posts with label supermarkets. Show all posts
Showing posts with label supermarkets. Show all posts
Wednesday, 9 April 2008
Friday, 29 February 2008
Consumers, Chickens and Changing the World
Good heavens! Sales of free range chickens increased by 35% last month whereas standard sales dropped by 7%.(TNS data reported in yesterday's Independent). Free range sales could have been higher except the shelves were empty because supermarkets could not keep up with demand. The catalyst was programmes by celebrity chefs Jamie Oliver and Hugh Fearnley Whittingstall drawing attention to the conditions in which standard chickens are kept.
Some are linking this news with the growth in Fair Trade, which doubled last year to £500m, and M&S's decision to charge for plastic bags, and concluding that consumers can change the world. The conclusion is indeed right, but commentators are missing one big point. The growth of Fair Trade has resulted from supermarkets stocking more products, and, as in the case of bananas, selling only Fair Trade, so consumers don't have the option of buying any other type. Similarly the decision to charge for plastic bags is led by the supermarket.
What is different about the chickens is that supermarkets had nothing to do with the change in what consumers bought. Indeed, they were taken completely by surprise as the empty shelves show. The change in buying was wholly due to consumers seeing something they did not like and acting.
The power of the consumer should never be underestimated. The supermarkets are not totally in charge. What is needed to change consumers minds and buying habits is clear communication, from a trusted source.
Farmers might do well to ask themselves if the media rolled up at their farms would they be proud to let the cameras in. And the farming industry should be asking itself whether it policies and practices always merit the same level of trust that the likes of Jamie and Hugh.
Some are linking this news with the growth in Fair Trade, which doubled last year to £500m, and M&S's decision to charge for plastic bags, and concluding that consumers can change the world. The conclusion is indeed right, but commentators are missing one big point. The growth of Fair Trade has resulted from supermarkets stocking more products, and, as in the case of bananas, selling only Fair Trade, so consumers don't have the option of buying any other type. Similarly the decision to charge for plastic bags is led by the supermarket.
What is different about the chickens is that supermarkets had nothing to do with the change in what consumers bought. Indeed, they were taken completely by surprise as the empty shelves show. The change in buying was wholly due to consumers seeing something they did not like and acting.
The power of the consumer should never be underestimated. The supermarkets are not totally in charge. What is needed to change consumers minds and buying habits is clear communication, from a trusted source.
Farmers might do well to ask themselves if the media rolled up at their farms would they be proud to let the cameras in. And the farming industry should be asking itself whether it policies and practices always merit the same level of trust that the likes of Jamie and Hugh.
Friday, 1 February 2008
Cloned Food
I'm surprised there's been so little fuss in the UK about cloned food.
On 11th January the European Food Standards Authority (Efsa) announced its conclusion that products from cloned pigs and cattle are unlikely to be a threat to food safety or the environment but that products should be labelled as cloned. It admitted that cloning has significant animal health and welfare issues. It was silent on the ethics of cloning. Comments from the public are requested by 25th February.
The next day the European Group on Ethics in Science and New Technology, reporting to the European Commission said "considering the level of suffering and health problems (to animals) EGE has doubts as to whether cloning animals is ethically justified". It went on to say that it does not see convincing arguments to justify the production of food from clones and their offspring.
But where is the outcry to get cloning stopped? Yes, the Soil Association, RSPCA, Compassion in World Farming and Friends of the Earth have spoken out against the practice, the media have reported the factual news, and supermarkets has said that they will not sell cloned products.To date though, there have been no questions raised in Parliament, no newspaper editorials providing a view, no surveys done among the public to see what they feel about the issue. The NFU say they will be guided by the science, which sidesteps the ethics, and see no need for labelling. Major food processors do not appear to have commented.
Contrast this with what has happened in America where the FDA announcement on 14th January that food from cloned cattle, pigs and goats is safe to sell into the food chain has caused outrage. The ruling was made in the teeth of four years of furious opposition from consumers, around 60% of whom have consistently said in research polls that they oppose cloned food on ethical and safety grounds, and from Congress for reasons of ethics and lack of robust data. Fury has been heightened by the decision not to require specific labelling, leaving the public with no idea whether they are eating cloned food or not. Big food processors and retailers have declared that they will not sell cloned foods. Even the NFU has said that if cloned food is to be sold then it needs to be labelled saying "consumers have a right to know if their food comes from cloned animals". The continued outcry has had an effect. The US Department of Agriculture has asked for the moratorium on cloned food sales to be continued to "allow sufficient time to prepare so that a smooth and seamless transition can occur". Which has been translated as buying time so that consumers can be educated.
It all raises the question of how on earth cloning animals for food has got as far as it has in the US. Clearly there are issues of ethics, unease, and compassion, meaning that consumers don't want to buy the products, food companies don't want to process them, and retailers don't want to sell them.
Getting back to the UK, why is it all so quiet here? Perhaps an announcement from Europe does not have the same impact as one from here at home. Perhaps people think it will never happen. Perhaps a short news report in the brain dead days just after Xmas isn't sufficient to raise awareness.Hopefully its just that it's early days in the process, and when the penny drops the UK public will spring into action with widespread and spirited campaigning. It worked on GM foods.
On 11th January the European Food Standards Authority (Efsa) announced its conclusion that products from cloned pigs and cattle are unlikely to be a threat to food safety or the environment but that products should be labelled as cloned. It admitted that cloning has significant animal health and welfare issues. It was silent on the ethics of cloning. Comments from the public are requested by 25th February.
The next day the European Group on Ethics in Science and New Technology, reporting to the European Commission said "considering the level of suffering and health problems (to animals) EGE has doubts as to whether cloning animals is ethically justified". It went on to say that it does not see convincing arguments to justify the production of food from clones and their offspring.
But where is the outcry to get cloning stopped? Yes, the Soil Association, RSPCA, Compassion in World Farming and Friends of the Earth have spoken out against the practice, the media have reported the factual news, and supermarkets has said that they will not sell cloned products.To date though, there have been no questions raised in Parliament, no newspaper editorials providing a view, no surveys done among the public to see what they feel about the issue. The NFU say they will be guided by the science, which sidesteps the ethics, and see no need for labelling. Major food processors do not appear to have commented.
Contrast this with what has happened in America where the FDA announcement on 14th January that food from cloned cattle, pigs and goats is safe to sell into the food chain has caused outrage. The ruling was made in the teeth of four years of furious opposition from consumers, around 60% of whom have consistently said in research polls that they oppose cloned food on ethical and safety grounds, and from Congress for reasons of ethics and lack of robust data. Fury has been heightened by the decision not to require specific labelling, leaving the public with no idea whether they are eating cloned food or not. Big food processors and retailers have declared that they will not sell cloned foods. Even the NFU has said that if cloned food is to be sold then it needs to be labelled saying "consumers have a right to know if their food comes from cloned animals". The continued outcry has had an effect. The US Department of Agriculture has asked for the moratorium on cloned food sales to be continued to "allow sufficient time to prepare so that a smooth and seamless transition can occur". Which has been translated as buying time so that consumers can be educated.
It all raises the question of how on earth cloning animals for food has got as far as it has in the US. Clearly there are issues of ethics, unease, and compassion, meaning that consumers don't want to buy the products, food companies don't want to process them, and retailers don't want to sell them.
Getting back to the UK, why is it all so quiet here? Perhaps an announcement from Europe does not have the same impact as one from here at home. Perhaps people think it will never happen. Perhaps a short news report in the brain dead days just after Xmas isn't sufficient to raise awareness.Hopefully its just that it's early days in the process, and when the penny drops the UK public will spring into action with widespread and spirited campaigning. It worked on GM foods.
Sunday, 20 January 2008
Supermarket Xmas Trading Shows Food Sales Resilient
The major supermarkets have posted their Xmas trading results, and its worth a burrow through the detail to see what they tell us about consumer spending, given the current economic gloom. People have to eat and indeed total food sales were well up v Xmas 2006 compared with all retail (everything from frocks to fridges) which was up just 1.4%. The question is whether belt tightening means a change in the type of food people buy.
Conventional wisdom, echoed by Justin King of Sainsbury's, says that at a time of tightened purse strings consumers will treat themselves to luxury food whilst cutting back on big ticket items, and it would appear that conventional wisdom is right.
With total food inflation for the period estimated at 1%, the league table of growth is led by Aldi at a whopping +12%. Whilst normally associated with low price food they said it was their premium range which drove the high sales. Morrisons was the clear winner among the "big four" supermarkets, coming in at + 9.5 %. Morrisons said the growth came from heavy advertising spend, and an emphasis on fresh food. Certainly they seemed to spend far more on advertising than other supermarkets, and much of the spend was behind their premium "The Best" lines. Next up was Waitrose, home of top quality, premium price products, with a 4.1% growth. Sainsbury reported figures for the 12 weeks to 5th January, and sales were up 3.7%. Their premium "Taste the Difference" range recorded its best ever quarterly sales growth. Luxury seemed to be the order of the day here with TTD Sherry Trifles up 154%, Courvoisier Butter up 232%, Salmon Fillets up 116%, and even Stilton up 43%. Sale of organic food was said to be strong, but no figures were given. By contrast, the basics range of low price food also grew, leading King to observe that growth came from "both ends of the basket". (Might explain the Aldi growth too). Somerfield grew by 4.7%, and Tesco by 3.1%. The one cloud on the generally strong story for food sales in general and premium food in particular was Marks and Spencer where sales were down by 1.5%. Sir Stuart Rose hinted that the type of food offered was out of line with consumer trends, and that he was planning radical changes, the first of which is the introduction of more specialised cooking ingredients such as smoked paprika and cinammon sticks. Which sounds pretty premium.
All supermarkets cut the price of many lines pre Xmas, particularly alcohol, and all warned that consumer spending would slow in 2008. Competition between supermarkets is likely to intensify which means a redoubled effort from the farming industry to ensure fair treatment for producers.
Conventional wisdom, echoed by Justin King of Sainsbury's, says that at a time of tightened purse strings consumers will treat themselves to luxury food whilst cutting back on big ticket items, and it would appear that conventional wisdom is right.
With total food inflation for the period estimated at 1%, the league table of growth is led by Aldi at a whopping +12%. Whilst normally associated with low price food they said it was their premium range which drove the high sales. Morrisons was the clear winner among the "big four" supermarkets, coming in at + 9.5 %. Morrisons said the growth came from heavy advertising spend, and an emphasis on fresh food. Certainly they seemed to spend far more on advertising than other supermarkets, and much of the spend was behind their premium "The Best" lines. Next up was Waitrose, home of top quality, premium price products, with a 4.1% growth. Sainsbury reported figures for the 12 weeks to 5th January, and sales were up 3.7%. Their premium "Taste the Difference" range recorded its best ever quarterly sales growth. Luxury seemed to be the order of the day here with TTD Sherry Trifles up 154%, Courvoisier Butter up 232%, Salmon Fillets up 116%, and even Stilton up 43%. Sale of organic food was said to be strong, but no figures were given. By contrast, the basics range of low price food also grew, leading King to observe that growth came from "both ends of the basket". (Might explain the Aldi growth too). Somerfield grew by 4.7%, and Tesco by 3.1%. The one cloud on the generally strong story for food sales in general and premium food in particular was Marks and Spencer where sales were down by 1.5%. Sir Stuart Rose hinted that the type of food offered was out of line with consumer trends, and that he was planning radical changes, the first of which is the introduction of more specialised cooking ingredients such as smoked paprika and cinammon sticks. Which sounds pretty premium.
All supermarkets cut the price of many lines pre Xmas, particularly alcohol, and all warned that consumer spending would slow in 2008. Competition between supermarkets is likely to intensify which means a redoubled effort from the farming industry to ensure fair treatment for producers.
Sunday, 6 January 2008
Animal Welfare - Supermarkets Respond to Consumer Pressure
Just a quick update on animal welfare for chickens. The consumer voice has now got so loud that Sainsbury, Morrisons and the Coop have announced this weekend that they will ban or phase out sales of eggs from caged hens, thus joining Marks and Spencer and Waitrose who have already removed them from sale. ASDA and Tesco are still dragging their feet, but are likely to come under pressure to act soon. The news comes just as Jamie Oliver and Hugh Fearnley Whittingstall start their campaign against intensively farmed chickens. (See blog "Animal Welfare Action" posted here on 6th December).
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