Supplier relationships key for Tesco

Like-for-like sales rose just 2 per cent during the past three months – the smallest rise since the mid-1990s.

Gates, the managing partner of management consultancy The Gap Partnership, notes that as retailers pass on consumer price cuts, “there will be continued tensions between retailer and supplier as to who should foot the bill”.

He says: “Both supermarkets and their suppliers should adopt a more constructive and less adversarial relationship. Price is an important negotiating point, but it is not the only one. Both sides should focus on other variables such as storage, delivery and promotional investment.

“By adopting more creative negotiation strategies that focus on delivering value for all parties, both supermarkets and their suppliers can continue successfully to work together in these difficult trading conditions. And the ultimate winner is the British consumer.”

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