// Tesco has asked for 50% discounts from suppliers
// The discounts will be partly funded by scrapping promotions
// The move is expected to start a price war
Tesco has reportedly demanded “offensive” discounts from its suppliers in a move which is expected to trigger a price war.
The Big 4 leader gave suppliers until Friday to accept discounts of up to 50 per cent, which will be partly funded by scrapping promotions, The Sunday Times reported.
Tesco has pledged to match Aldi’s prices on 500 products after gaining share from the discounter for the first time in 10 years during the coronavirus lockdown.
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Meanwhile, Aldi and fellow German discounter Lidl are likely to cut prices further.
A Tesco supplier said that what it has been asked for by the grocer was “frankly offensive”.
If Tesco removes promotions, it will “halve its business” with the suppliers.
Meanwhile, Tesco said it was committed to open and fair relationships with suppliers.
Its tough stance in part reflects an effort to avoid the mistakes of the last recession, when its reluctance to cut prices put Aldi and Lidl ahead.
Last week, Tesco chairman John Allan said he was set to lead a committee of business leaders tasked with generating policy ideas for boosting the UK’s post-coronavirus economy.
Allan will chair the new Covid Recovery Commission, the launch of which was announced on Friday.
Chancellor Rishi Sunak had agreed to endorse it, but will not have a formal government mandate.
The panel will aim to develop “bold” policy ideas for strengthening UK productivity, and encouraging business investment, as well as promoting innovation.