Tesco suppliers have been warned they risk giving “legitimacy” to the supermarket’s controversial call for fulfilment fees if they cave in to its demands.
Delivering the retailer’s results last week, CEO Ken Murphy said a “meaningful number” of suppliers had agreed to the new fees, which it hopes to charge for them using its online grocery offer and Booker wholesale arm.
Murphy added that suppliers had accepted that they had received a “free ride” when it came to online fulfilment.
However, David Sables, CEO of Sentinel Management Consultants, said he believed the vast majority of suppliers were standing firm against Tesco’s request, which it has insisted is voluntary despite an initial threat that suppliers who don’t sign up could be delisted.
“There was always a prospect that some suppliers would see an opportunity in this,” said Sables.
“The danger is it creates a legitimacy to Tesco’s request, which may put the pressure on other suppliers.
“I think Ken Murphy’s choice of words is interesting. I think for ‘meaningful’ we should read ’very low’. I still think the vast majority of suppliers realise this is a bad idea which is taking away from the simplicity that had been introduced into Tesco’s buying operation previously.”
The Retail Mind founder Ged Futter added: “I don’t know of a single client who has signed up to these fulfilment fees and I work with a lot of clients.
“I think this is baloney from Tesco. I also don’t understand what Ken Murphy hopes to achieve by accusing suppliers of having a free ride. Tesco had appeared to have been more conciliatory after its initial approach, but this language is ratcheting things up again.”
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