Former Sainsbury’s food director Ian Merton has called on growers and marketing companies to support supermarkets through the economic slowdown, insisting they are facing the same pressures as the rest of the supply chain.
Speaking at an SCI Horticulture Group meeting in London last week, Merton said: “Retailers have all the same pressures. Consumers are spending less or spending differently and they have to find ways to cover that. There have been claims of bullying in the press, but it is difficult to see what is happening from the outside. It is clear that next year will be tough.”
But he was made to defend himself when a former soft-fruit grower spoke up from the floor to brand his comments “shameless”.
Merton started out by reminding the group that the Competition Commission had concluded its two-year inquiry into the UK grocery market that “overall, supermarkets are good for the consumer”, especially as the price of food has fallen steadily through retailers “driving efficiency into the business”.
He spoke of the creation of his first partnership linking a retailer, a packer and a grower in 1989 and insisted that the supply chain has continued to work together.
But he was clear that “people talking themselves into a recession before we are really there” has made it difficult for the industry.
Rival retailers could follow Tesco, predicted Merton, which has responded to the financial crisis by positioning itself as “Britain’s biggest discounter” and adding a fourth tier to offer a cheaper range alternative to its economy, standard and premium lines.
But he stressed that the movement towards consumers downtrading to save money offers the fresh produce department a “wonderful opportunity” to sell itself as a value-for-money purchase, especially in its loose format.
He said: “We have to respond to this and have the right product at the right time and in the right place. Then you can tempt them back up when the timing is right.”
Merton predicted that consumer loyalty to supermarkets and brands will continue to wane as they switch to find the best prices and there will be “a lot more of this going on until we get into a better financial scenario”.
He insisted price was “absolutely” the most important factor to retailers and consumers in the prevailing trading conditions, but that quality, appearance, provenance and the environment could not be forgotten.
He added that shoppers are likely to do smaller shops more frequently, so convenience retail formats will be more appealing in the medium term.
Merton also advised fresh produce players to review their businesses to become more adaptable. He said: “You have to keep looking at your cost structures and this has to be ongoing. The most important thing is to keep in touch with your customers and form a close alliance - it is the value that is created between the retailer and the industry, and transferred to the consumer, that will make for a success…
“Your customers need you, even if the buyers don’t always outwardly show this. Be brave, but plan carefully and, mostly, be flexible and able to adjust your offer, because the retailers will be looking to their suppliers for solutions to their problems.”
Merton, who is now associate director at MorePeople, has 40 years’ experience as a buyer, having joined Sainsbury’s in 1968.
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