Tesco to suppliers: Price rises must be legitimate

Will Green is news editor of Supply Management
18 November 2016

Tesco boss Dave Lewis has told suppliers that price rises “need to be legitimate” while accusing firms of wrongly trying to pass on costs.

Speaking in light of a recent dispute with Unilever over a 10% price hike for Marmite and other goods, Lewis said he would not hesitate to remove products from his shelves.

During an investor seminar Lewis, who previously worked for Unilever, said currency volatility was a normal part of business.

“I would ask companies in those positions to not ask UK consumers to pay inflated prices in order that their reported currency is maintained,” he said according to the Daily Telegraph.

“They don't do that to countries outside of the UK and while they may have put the UK into their European arm, we don't want that to be driving their pricing decision. We will work with them to offset it as much as they can.”

Tesco pulled a number of products from its website during the Unilever dispute, described by commentators as the shape of things to come as Brexit uncertainty and the weak pound push up costs.

During the seminar Tesco said it was aiming to reduce operating costs by a further £1.5bn by 2020, having achieved annualised cost savings of £500m over the past two years. This would be achieved by saving £550m through its store operating model, £450m from logistics and distribution and £500m from goods not for resale.

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