Pick n Pay talks prices with food manufacturers
With consumers feeling a major spending squeeze, food suppliers have been asked by Pick n Pay boss, Nick Badminton (left) to investigate ways of cutting costs.
This followed a much-publicised meeting between the company’s CEO Nick Badminton and the retailer’s suppliers “The meeting was both constructive and engaging. “It gave us an opportunity to illustrate to our suppliers the intense consumer pressure we are facing and at the same time, gave them an opportunity to provide a good insight into what is currently driving food prices,” Badminton said in a statement.
Outcomes of the meeting included the decision that relationships with suppliers would continue to be characterised by open, transparent and very robust debate.
“Suppliers will provide detailed explanations of significant increases by providing evidence of such input cost increases, to satisfy Pick n Pay that increases are justified. “This will enable Pick n Pay to communicate with accuracy to its customers,” Badminton said. Some suppliers raised the issue of import parity, but accepted that there were strong arguments both for and against import parity and that this required further discussion and understanding, Badminton said.
Possible areas of monopoly in input items were identified, and where appropriate, Badminton said suppliers were encouraged to report these to the Competition Commission.
“Areas highlighted where possible further investigation may be required include packaging, tin, paraffin wax, glass and fertiliser,” he said. The food retailer said it would continue with its efforts and investments to move away from direct store delivery to managing its own distribution to reduce total supply chain costs and pass on these savings to consumers. “All suppliers committed to supporting Pick n Pay in this transition, accepting that they would, in parallel need to eliminate infrastructure in their own distribution systems,” Badminton said.
According to Pick n Pay’s CEO, the company was moving its internal structure towards category specialisation, which meant that its buyers would become specialists in those fields, enabling them to develop an even more detailed understanding of the component and input costs of each product.
When dealing with food prices, consumer education was key, Badminton said — and to this end, Pick n Pay would continue “communicating directly with consumers and with society”. (source: Sapa)
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