Tesco 'completely reset' relationships with suppliers

Will Green is news editor of Supply Management
8 April 2020

Tesco has “completely reset” relationships with suppliers over the past five years and this has helped the retailer cope with the coronavirus outbreak.

In the company’s latest results it said supplier satisfaction had “reached its highest score to date”, while “working closely with supplier partners to simplify our range” allowed more popular products to get onto shelves during the crisis.

Tesco said during the panic buying seen in March sales in the UK went up by around 30%, which “cleared the supply chain of certain items”.

Chief executive Dave Lewis said: “Over the last five years we have focused on serving customers better, re-engaging our colleagues, completely resetting our relationships with our suppliers and as a result we have been able to add value for our shareholders.

“These endeavours put us in a strong operational and financial position to deal with the challenges of Covid-19.”

Tesco said coronavirus meant it was “incurring significant additional costs” and the estimated impact on retail cost lines was between £650m and £925m.

The supermarket said it had increased capacity in home deliveries by more than 20% but “there is simply not enough capacity to supply the whole market”.

“Between 85% and 90% of all food bought will require a visit to the store,” it said.

The UK Warehouse Association has warned a lack of warehouse space, caused by the lockdown and a build-up of non essential items, could cause “blockages” to food and pharmaceutical supplies.

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