Price Fixing in Supermarkets...

We used to shop at our local Safeway until about two years ago, when we swapped to a Morrisons (about 7 miles away) - the difference was instant, some 10 - 20% cheaper on our weekly bill.

Of course, last year the local Safeway swapped to being a Morrisons, so now we have the cheap prices, but 6 miles nearer.

Problem with Morrisons is that some stuff is poorer quality(veg for a start) but the Morrison/Safeway branded dry and tinned goods seem to be about the same quality.

So I save on the non perishable and buy better quality at the local butchers,greengrocers.

hmm

http://news.bbc.co.uk/1/hi/business/4435339.stm

[Pierre]

Originally Posted by homealone

hmm

http://news.bbc.co.uk/1/hi/business/4435339.stm

Good for them, a successful company that we should celebrate about. Obviously run by a management team that know what they're doing.

In the week of the Longbridge debacle, it's good to see.

In regards to pricing and ethics, Tesco, and indeed any supermarket can charge what they bloody well like. This is one area where the consumer is overwhelmed with choice, from supermarkets, markets, local shops, etc

Within 3 miles of my house I have an Asda, 2 Tesco, Sainsburys and Morrisons. I also have a parade of local shops and a mini market and I use them all (except Sainsburys)

On Tesco's results, again difficult to judge as the margin isn't published. Is usually pretty tight though I would expect the growing financial services etc to be yielding higher margins. My problem with Tesco is purely that having moved out of the High Street into its big edge of town stores, it's now moving with some speed into the convenience sector which will consume small, independent shops (some of which also house other amenities like Post Offices). The supplier relationship is also a concern as their dominant market position means they may yield unhealthy power.

Originally Posted by andyl

On Tesco's results, again difficult to judge as the margin isn't published. Is usually pretty tight though I would expect the growing financial services etc to be yielding higher margins. My problem with Tesco is purely that having moved out of the High Street into its big edge of town stores, it's now moving with some speed into the convenience sector which will consume small, independent shops (some of which also house other amenities like Post Offices). The supplier relationship is also a concern as their dominant market position means they may yield unhealthy power.

yes, I have no problem with companies being successful & making a profit, that is why they are in business.

- but as an employee of a company that supplies Tesco I know how much we have had our margins reduced, in order to help them to make that profit.

It is my opinion that the balance has swung too far in the retailers favour, comments on the BBC article I linked to, above, include one from a supplier who has had to stop supplying Tesco as it was costing him too much money

[Paul K]

Originally Posted by homealone

yes, I have no problem with companies being successful & making a profit, that is why they are in business.

- but as an employee of a company that supplies Tesco I know how much we have had our margins reduced, in order to help them to make that profit.

It is my opinion that the balance has swung too far in the retailers favour, comments on the BBC article I linked to, above, include one from a supplier who has had to stop supplying Tesco as it was costing him too much money

Unfortunately it's the same in all supply industries, I worked for a company that manufactured components for a number of car companys. Each year they demanded a 10% reduction in costs per component and it basically led us to the point where we would have to continue developing new parts as the old established components were actually selling at a loss to companies like Ford, Honda, Rover etc. Without developing new components we wouldn't have had any parts that we could sell at a profit

Originally Posted by Paul

Unfortunately it's the same in all supply industries, I worked for a company that manufactured components for a number of car companys. Each year they demanded a 10% reduction in costs per component and it basically led us to the point where we would have to continue developing new parts as the old established components were actually selling at a loss to companies like Ford, Honda, Rover etc. Without developing new components we wouldn't have had any parts that we could sell at a profit

the saving grace for us, is that we have our own brands, as well as manufacturing 'own label' for retailers. There is some very complicated negotiation involved in gaining the shelf space for our brand - largely centred around contributing to promotions for their own label products in the same category.

Obviously we have competition from other manufacturers in our sector, so as you say, Paul, we continually have to innovate in order to maintain our market share & margin.

Supermarket price fixing also has effects on employment patterns - we have laid people off recently as we now import a major raw material in a semi-processed state, rather than processing it ourselves - this is only possible because the processing is done in China. So we ship a product half way round the world & back again, to make a saving on labour costs, which enables us to meet the price point - but at the expense of local employment.

[Pierre]

Supply and Demand, the basics of business.

There may be reduced margins, but suppliers must be making money out of it otherwise they wouldn't be able to do it.

It's all good for the consumer.

[Paul K]

Originally Posted by Pierre

Supply and Demand, the basics of business.

There may be reduced margins, but suppliers must be making money out of it otherwise they wouldn't be able to do it.

It's all good for the consumer.

Sorry but that's not always correct, the company I worked for had very tight margins and made no significant profit in the final 2 years it was open. In the end it's parent company had to close the plant and move the component production abroad because the only way to stay afloat was to cut production costs and the only way to do that was to cut labour costs as the plants were running flat out 24 hours per day 5 days per week.
Forcing suppliers to cut costs is the reason why so much manufacturing has left Britain and moved into Eastern Europe and India/ Asia. Cheaper labour means that they can continue to run at profit while reducing the price per component by the ammount demanded by the company they are supplying.

[Pierre]

Originally Posted by Paul

Sorry but that's not always correct, the company I worked for had very tight margins and made no significant profit in the final 2 years it was open. In the end it's parent company had to close the plant and move the component production abroad because the only way to stay afloat was to cut production costs and the only way to do that was to cut labour costs as the plants were running flat out 24 hours per day 5 days per week.
Forcing suppliers to cut costs is the reason why so much manufacturing has left Britain and moved into Eastern Europe and India/ Asia. Cheaper labour means that they can continue to run at profit while reducing the price per component by the ammount demanded by the company they are supplying.

But that's just a sad fact of life, if you're not competetive and diverse you'll go out of business.

TESCO will slide down the table in a few years, can everyone remember KWIK SAVE a few years ago?? They were top of the tree cheap and nasty same as TESCO are now, a new kid on the block will arive in a few years time.

[andygrif]

Originally Posted by homealone

yes, I have no problem with companies being successful & making a profit, that is why they are in business.

- but as an employee of a company that supplies Tesco I know how much we have had our margins reduced, in order to help them to make that profit.

It is my opinion that the balance has swung too far in the retailers favour, comments on the BBC article I linked to, above, include one from a supplier who has had to stop supplying Tesco as it was costing him too much money

You're absolutely right. Making money isn't the problem here, it's making money at ANY cost that I have trouble with...and that's exactly what Tescos does.

Not only do they squeeze the small guys (and often the big suppliers too) into the ground, but they will take on anyone that gets in their way by throwing money at it.

Planning departments at councils don't have enough money to fight the rather expensive lawyers at Cheshunt, who can throw an unlimited amount of money ensuring that any application they make gets cleared.

Opening Metro stores right opposite local convenience stores, using their buying power to run loss-leaders on popular lines until the incumbent goes out of business - then putting the prices up.

I could go on (can you tell?) but these are not the actions of a business with any sort of conscience what so ever.

Originally Posted by Pierre

It's all good for the consumer.

You're right...at this moment in time it's good for the consumer. Thinking longer term and rose coloured glasses have faded. If intesive farming continues in the manner it has so far we will literally kill our land. We continue to run the risk of long-term health issues due to the forced way in which veg is grown and animals bred...

Did you know that hens bred for meat have been bred to have a larger breast in a shorter breeding time? This means that they reach a larger than adult size and weight before their legs have matured enough to carry themselves...this means that these hens are literally sitting in their own muck 24/7 - absorbing all the chemicals therein...which we then eat.

Before you write me off as a lentil eating hippy, I'm not. I'm a meat-eating capitalist...but I do actually care about the country and more importantly what goes in my mouth.

Originally Posted by bobthetree

food is too damn expensive

Yes but cheaper food won't/doesn't equate with better food.