Retailer insistence on new product development at the expense of value could become the "key strain" this year in the relationship between retailers and suppliers, Andy Bond told The Grocer this week.
Briefing reporters at The Grocer's weekly news conference in his capacity as guest editor of the magazine this week, the Asda CEO said suppliers needed to focus on adding value to products rather than introducing new premium lines.
"One of the key strains at the moment is brands pushing premiumisation when what retailers want is the delivery of core value for customers," said Bond. "There has never been a time when value was more important and suppliers need to be delivering this through their core brands."
Bond questioned the merits of Tesco's new Discounter range. "I see the logic, but what's strange is it's a fourth tier, which
introduces complexity. It's cost additive."
Developing different pack formats to suit different shopper types on a budget would be better than developing completely new products, Bond argued. This process was already happening at Asda, with more space being given over to bulk packs to suit families, and small formats for smaller households. "We continue to go adopt a systematic and tough approach to getting our range right. As customers struggle to make ends meet, pack sizes are diverging. It's the middle that struggles."
A branded supplier said getting new products listed was already a considerable challenge for suppliers: "Items won't get listed on the basis of a good idea any more," he said. "You'll need a strong [business] case and a very competitive price to get listed."
But, he said, ditching NPD in favour of new pack sizes could backfire. "Maybe in this climate this is the right approach but in the long run it could leave them with a limited food offering."
Briefing reporters at The Grocer's weekly news conference in his capacity as guest editor of the magazine this week, the Asda CEO said suppliers needed to focus on adding value to products rather than introducing new premium lines.
"One of the key strains at the moment is brands pushing premiumisation when what retailers want is the delivery of core value for customers," said Bond. "There has never been a time when value was more important and suppliers need to be delivering this through their core brands."
Bond questioned the merits of Tesco's new Discounter range. "I see the logic, but what's strange is it's a fourth tier, which
introduces complexity. It's cost additive."
Developing different pack formats to suit different shopper types on a budget would be better than developing completely new products, Bond argued. This process was already happening at Asda, with more space being given over to bulk packs to suit families, and small formats for smaller households. "We continue to go adopt a systematic and tough approach to getting our range right. As customers struggle to make ends meet, pack sizes are diverging. It's the middle that struggles."
A branded supplier said getting new products listed was already a considerable challenge for suppliers: "Items won't get listed on the basis of a good idea any more," he said. "You'll need a strong [business] case and a very competitive price to get listed."
But, he said, ditching NPD in favour of new pack sizes could backfire. "Maybe in this climate this is the right approach but in the long run it could leave them with a limited food offering."
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