Sainsbury's and other retailers have been accused of 'greedflation' © Photo by Matthew Horwood/Getty Images
Sainsbury's and other retailers have been accused of 'greedflation' © Photo by Matthew Horwood/Getty Images

Supplier-retailer relations at ‘breaking point’ as Sainsbury’s denies profiteering

28 April 2023

Rising costs are straining relationships between buyers and suppliers, leading to Sainsbury's and Unilever denying that they are profiteering amid the cost-of-living crisis. 

Retail analyst and former buyer at Asda Ged Futter said relationships between retailers and suppliers are breaking down and they are no longer collaborating to tackle cost increases. 

Futter's comments come amid ongoing tensions between retailers and suppliers, after Tesco chairman John Allan claimed suppliers were taking advantage of inflationary environments to unnecessarily increase costs.

Futter told Supply Management: “There hasn't been collaboration there for the past two years. That's the biggest problem. Retailers will continue to try and bully their suppliers as they're not working collaboratively. They're not working long term. 

“The impact on suppliers is it's making their jobs that much harder. It means that you can't plan long term so you don't know what's happening so the relationships are strained. They’re at a breaking point between many retailers and suppliers.” 

He spoke as Unilever and Sainsbury's both denied profiteering from price rises, after a report by trade union Unite accused supermarkets of “greedflation” following rising prices. 

The chief executive of Unilever, Alan Jope, said “we are not profiteering in any form”, as the Ben & Jenny’s and Marmite owner insisted it was only passing on three-quarters of its increased costs to customers in its first-quarter trading statement.

“We are very conscious that the consumer is hurting and that’s why we are not passing through the full price increases and are asking shareholders to bear some of the burden,” Jope said. 

Meanwhile, Sainsbury's chief executive Simon Roberts said the firm has spent £560m keeping prices low. 

In the firm’s preliminary results, Roberts said: “We really get how tough life is for so many households right now, which is why we are absolutely determined to battle inflation for our customers. 

“Our focus on value has never been greater and we have spent over £560m keeping our prices low over the last two years.”

The supermarket’s underlying profit before tax fell 5% in the last year to £690m.

Roberts said it has been “another difficult year for food supply chains”, and said it was working “closely with our suppliers and farmers”, investing £66m in support to British farmers over the past year.

Futter however warned that supermarkets have claimed to care about the future of British agriculture “in their words”, but “not in their actions”. Dwindling profits of suppliers and growers is putting the future of British agriculture at risk, he warned. 

“I am absolutely concerned about the future of British agriculture. At the moment you’ve got apple growers cutting down orchards and not planting new trees. Growers, farmers and producers are struggling.

“That's what we saw with eggs last year when retailers were warned that we're going to run out of eggs. They ignored it. We ran out of eggs, and now eggs will not be back in full supply until the summer, nine months after the issue appeared on the shelf.”

Shrinking domestic agriculture will make Britain more reliant on imports, making it more susceptible to supply shocks and will lead to increased prices, he said. 

Buyers have been too focused on cost, and not enough on collaborating with suppliers and nurturing relationships. He added: “Any buyer that just buys purely on cost is not doing their job.”

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