Tesco’s incoming UK chief executive has told the food industry the company thrives on “commercial tension” and praised its “relentless, fanatical focus on the customer”.
Addressing more than 800 of the retail industry’s most senior figures at this week’s IGD Convention, Tesco commercial and marketing director Richard Brasher, who will take up the reins as UK ceo next March, said the business benefited from putting pressure on its suppliers.
Acknowledging the media attention surrounding relationships between retailers and suppliers, Brasher said: “The customer is in the driving seat and empowered by their choices. What the customer thinks is good quality this week will just become the same old product next week and we have to keep pushing to go the extra mile.
“In the pursuit of this we do put people under pressure. I believe in commercial tension between retailers and suppliers. It has made our industry more efficient and creative.”
Brasher promised delegates his tenure at the top would continue Sir Terry Leahy’s work with a “passionate” focus on the customer and with a “relentless drive, focus and inventiveness”. He added the retail industry was not one of “cosy collaboration”.
Brasher praised Branston, holding up the large potato supplier as an example of a business which Tesco had given “a clear route to market” in the last 10 years, allowing it to invest and develop.
The speech came in a week when the Independent on Sunday revealed a memo leaked from Asda had instructed buyers to play “good cop/bad cop” in meetings with suppliers and told them to “buy for less”.
The paper reported the document told buyers to “open [negotiations] outrageously (including plenty of fat). The bigger the opening figure, the bigger the settlement figure”.
An Asda spokeswoman told the paper: “Do we drive a hard bargain with our big, multinational suppliers? Absolutely. However, while we may be firm, we are always fair.”
At the IGD event, host Michael Buerk quizzed Waitrose md Mark Price over the retailer’s boom despite the recession.
Price insisted that it was being careful to maintain the company’s “culture” in growing and “in the last two years buyers have worked really hard with producers to mitigate the risk of expansion”.
Price also pointed out that, while the retailer has increased the number of promotions from 400 to 800 a month, only 18-20 per cent of products were cuts and the “vast majority” of products were sold at a healthy margin for everyone in the supply chain.
Morrisons new chief executive Dalton Philips was positive in one of his first public appearances at the event, praising the company’s vertical integration in a sometimes gruesome speech in which he detailed the retailer’s meat supply chain.
Philips said: “We believe that going forward the customer is changing and we are in a position to take advantage of that.”
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