18 August 2009 | Allie Anderson
The Co-operative Group has reportedly asked suppliers to cut prices by up to 10 per cent following its takeover of Somerfield this year.
According to a report in The Grocer, Co-op is in negotiations with vendors after contacting them in May with proposals to slash prices.
The company said all negotiations were being conducted in a fair manner.
One supplier told the magazine that Co-op was "re-tendering large portions of its own-label business to consolidate its supply base", while others claimed their contracts would be re-tendered if they could not cut prices by between 5 and 10 per cent.
The company has also halved its number of own-brand ready meal suppliers from four to two, according to The Grocer.
Co-op's £1.57 billion takeover of Somerfield in March gave the firm an 8 per cent share of the retail market and annual sales in excess of £7 billion. With increased buying power re-tendering suppliers' contracts was inevitable, one supplier told The Grocer.
A Co-op spokesperson would not confirm details but said in a statement to supplymanagement.com: "We announced at the time of our acquisition of Somerfield that we were negotiating improved terms with our suppliers that are in the long-term interests and well-being of our suppliers, our business and our customers. These negotiations are being conducted on a fair, commercial and constructive basis."
The company's CSR commitments include "building fair and sustainable relationships with its suppliers across its whole supply chain".