Talking Tesco: UK Competition Commission

Supplier relationships

We have received comments, not only from suppliers of Tesco, but also from our people who work directly with our suppliers.

One supplier commented that they view Tesco as a partner whereby their business can benefit by having Tesco as a customer and Tesco recognise the benefit of their business too. They find Tesco to be very fair. They also commented that our customer insight data was valuable to their business. This was recently highlighted in a report by The Food Chain Centre which noted that suppliers benefited because:

  • The information gave them a much better understanding of their market and their customers

  • It helped identify the different types (segments) of customers in their markets

  • They were able to tailor their marketing to meet customer needs

  • They tailored their business or marketing plan to improve their appeal to new customers, be it retailer, wholesaler, merchant or consumer.

Robert Wiseman Dairies explained the positive nature of their relationship with supermarkets in their submission to the Competition Commission:

"A key ingredient in the growth and success of our Company has been the relationships that have been developed with our key supermarket customers, such as Tesco and Sainsbury’s....Our experience has been that the positive working relationship with these customers has provided us with the confidence to develop our business."

This has enabled them to be innovative:

"Through this period the support of our key customers has been critical in the development of new products, such as “The One”, and own label extended shelf life milk, initially developed as the Tesco “Pure” brand.

And has benefited consumers:

"Our view is that the development of supermarkets in selling fresh liquid milk has allowed consumers to access a higher quality product at a lower price. As well as this better value in standard milks, there has also been an improvement in choice for consumers due to new product development within the supermarkets."

One of our technical managers contacted us to express his dismay at reports in the media about our relationships with suppliers. He worked in agriculture for many years prior to working for Tesco and he now works closely with growers and packers to ensure the quality standards are never compromised for our customers. He enjoys the relationship he has built with them over the years and explains that Tesco offers:

"...a range that is wide to utilise the majority of their crops and prices that allow investment to continue. This is offered not only on a daily basis, but the commitment is made with annual programs sharing the volume growth and expectations for the yearly deliveries."

"Tesco rarely moves from one supplier to another, they are incredibly loyal and spend time to help a supplier develop, not change for a cheaper one."

We know this to be true because over half of our suppliers have worked with us for five years or more. We are committed to a supplier partnership approach because our success depends on the success of our suppliers. By forging long-term partnerships with our suppliers and identifying new innovative suppliers we are able to constantly broaden and improve our product range.

Have you got any views on this issue? – please join the debate