Anyone hoping beleaguered supermarket Tesco had put accusations of supplier mistreatment behind it was in for a sharp shock yesterday. The supermarket sent emails to suppliers demanding they cut prices or face having their products removed from shelves, according to the Sunday Times.
The revelation is an embarrassment for Dave Lewis, the supermarket’s chief executive, who pledged in December to ‘reset’ its relationship with suppliers as it tries to revive its fortunes. It comes just days after Christine Tacon, the Groceries Code Adjudicator, announced she was investigating the supermarket over its supplier payment practices.
The emails are said to have contained a detailed breakdown of raw materials costs and demands for price cuts of up to 10%. The supermarket has pledged to dismantle its system of charging suppliers for promotions, so it's possible that it's seeking to balance the books by other means.
‘There was a lot of pressure,’ one supplier told the Sunday Times. ‘We eventually had to agree to cut prices, but not by as much as they originally asked. We haven’t had similar letters from the other supermarkets we work with.’
Read more: What next for the toxic grocer?
To be fair, commodity prices have fallen a lot in the past year or so – most notably oil, but also wheat, sugar and coffee. The Bloomberg Commodity Index has dropped 19.8% in the last 12 months. But an abstract chart won’t be enough to reassure the increasingly vocal sceptics.
Of course the supermarket tried to deflect criticism - 'We work with over 3,000 suppliers across the UK and hold regular discussions with them on how to provide the best products and great value for customers,' a spokesperson said. But its critics are not going away.
‘This latest revelation, coming so soon after the announcement that Tesco is to be investigated for alleged breaches of the groceries code of practice, demonstrates a complete disregard for any moral or ethical dealings with their supply chains,’ said Phil Orford, chief executive of the Forum of Private Business.
'Commercial bullying is no longer acceptable, especially towards the backbone of British business – small businesses – and we will be seeking further action to prevent this type of activity becoming normalised.’
What's to be done though? Changing a company's culture isn't something that can be done overnight and for now Christine Tacon lacks any real power to effect change. Maybe the Government's decision to arm her with the ability to dole out fines will make the supermarkets sit up and take notice.