Swathes of small suppliers could be in danger of losing “100 per cent” of their business as the Big 4 supermarkets look to review product lines.
According to industry specialist Bridgethorne Tesco’s recent “Project Reset”, which it launched in 2015 in an effort to remove 20 per cent of its product range which it classed as no longer desirable, could soon be implemented in other major grocers.
Tesco is now entering the second phase of this project in which it will axe its relationship with numerous suppliers and strengthen it with others.
“This, we believe, will set a pattern that will be mirrored by other retailers across the grocery sector,” Bridgethorne chief executive Andrew Cole added.
“For some suppliers it isn’t about winning or losing five per cent or 10 per cent of their business, it could be about losing up to 100 per cent of their business. It’s that serious.
“The implication of this for suppliers – both branded and own-label suppliers – as part of their ongoing category management will be the urgent need for them to identify both the threats and opportunities for their business, and what steps they need to take to defend themselves against delisting.”
This comes after MPs grilled the bosses of soon-to-merge Sainsbury’s and Asda over their claims that the newly formed company will be able to reduce the cost of essential items by 10 per cent.
Environment, Food and Rural Affairs Committee chairman Neil Parish said the proposed merger would reduce consumer choice and “extract more pain” from smaller suppliers.
He argued that when the companies merge, the newly combined company will simply pick the cheaper of the two former suppliers to continue working with.