Suppliers have raised serious concerns over the deep cuts involved in Tesco’s Big Price Drop that kicked off on Monday.
The UK’s largest supermarket announced its newest, long-term cuts on 3,000 “essential” lines including fresh produce at a cost of £500 million. It will be ceasing its double Clubcard points promotion next month, making a saving of some £350 million.
Suppliers have expressed their alarm over the promotional push. One Tesco supplier told FPJ: “I’m quite concerned about it and there’s a lot of other people who are. Margins are tight now and input costs are rising continually.
“Tesco are never going to lose out of it. One of the most concerning figures is that the long-range weather forecasts show we are in for a very hard winter. It’s going to come early this year and it’s going to be very hard.”
Fresh produce lines involved in the drop include polybagged Finest Jazz apples and Market Value pears, each with a saving of five per cent.
And another supplier said: “It smacks of desperation to me as relatively, Tesco have not been doing so well lately.
“They have been very hard on price with us, trying to get it as low as possible. But the market is short and it is going to get tighter so they have to put their hand in their pocket. They are taking the hit at them moment, but come the end of the year, they will haul us up there and tell us they have sold lots of fruit for us and ask us for some free money.”
The new campaign has been given no end date, although several vegetable lines included in the drop such as capsicum, baby carrots, garlic and chillies have prices only valid for one month on Tesco.com.
Sainsbury’s said: “This is classic smoke and mirrors from Tesco, giving with one hand and taking with the other… It is no surprise to us that Sainsbury’s price-match policy, together with a stronger own brand offer, has forced Tesco to take this kind of action.”
Asda said its 10-per-cent-cheaper price guarantee still stands and Morrisons simply said: “We have been doing some great deals for customers and we’ll continue to do great deals.”
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