David Sables

The mainstream media just won’t leave the cost price increase thing alone. Well, it’s a newsworthy story all right: apart from the mortgage, food bills and inflation more generally are probably top of their fears. What surprises me though is how many take the angle that suppliers are being brazen and full of skulduggery. This is a cut and dried case of costs hitting the suppliers out of the blue.

Depending on the mix of imported goods, the hit has been about 15%. But if you import from Chile, for example, it’s more like 19%. The accusation that suppliers raise cost price more than they need to fascinates me as it’s the suppliers who take the risk of lost sales. They don’t need to be fearing delists as well. We’ve advised suppliers for years on the right approach to justifying and implementing responsible pricing moves. Today’s justification is the easiest ever, yet the retailer push back is the most dogmatic. There is confusion among suppliers about the style in which to communicate. Ask if it’s OK and it will never happen, but if you tell them it’s happening that’s too arrogant apparently. Intelligence, empathy and resolve is the best way, no matter who you are.

Suppliers are even more cautious today than normal. So why would they hike the price more than they need to? Let me offer a reason that isn’t just profiteering. It’s always been an ordeal getting justifiable price rises through the retailers. They hate doing it so much that some take a bit more to future proof the need to do it again soon afterwards. It would be better if there was a climate in which only necessary rises were seen at whatever interval was necessary.

October still showed deflation across the main categories, and retailers will now have the usual price war through the Christmas period, so the real food pricing level will not be seen until late in January 2017. At least media coverage has prepared the consumers who see the retailers as completely blameless post Marmite. Instead of perpetuating the myth that suppliers are ogres, heads need to rise out of the sand as the wave of pricing hits in January. Any alternative will lead to redundancies, declining food specifications or cuts in R&D and innovation. I’m sure shoppers don’t want that, either.

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