French supermarket chain Carrefour has slapped price warnings on products from Lindt chocolates to Lipton Ice Tea to pressure top consumer goods suppliers Nestle, PepsiCo and Unilever to reduce inflation ahead of much-anticipated contract talks.
French supermarket chain Carrefour has slapped price warnings on products from Lindt chocolates to Lipton Ice Tea to pressure top consumer goods suppliers Nestle, PepsiCo and Unilever to reduce inflation ahead of much-anticipated contract talks.
How so?
Supermarkets are the source sales for vendors so they have more power during negotiations. Alot of vendors want contracts with big businesses (supermarkets) because their supply chain network but give up a lot of negotiation power.
An example. Vendors mostly use a cost plus pricing. Think cost+oh&p(15%)=price to store. During contract negotiations vendor A can push for an increase in price due to cost escalations or just cut down in their oh&p percentage. Eventually the percentage can get so low that it’s not worth the business. So vendor A can push for a price increase but the supplier can also push back and threaten to go with vendor B.
supply chain? In many US stores the shelves are often essentially rental property and the vendors stock them themselves.
That’s true for bigger manufacturers like fritolay but not all work the same. I’ve never read their contract/service agreements so I can’t say what is in the terms but I imagine they’re different for big corporations like a Walmart vs a small town local store.