Have you been kidnapped by your suppliers?

16 June 2011
Just over a year ago we found that the pool of sympathy for suppliers facing a margin squeeze was rather limited. But subconsciously, you may be more sympathetic than you think. According to Jim Leaviss, head of retail fixed interest at M&G Investments, supermarkets have managed to avoid the ire of shoppers, even though the cost of the weekly shop has significantly increased. European retailers have actually cut their prices following rises in inflation, whereas their UK counterparts have passed higher charges onto customers enabling them to retain their profitability, he said. But, it seems shoppers don’t mind. We all know global commodity prices are going up, so we accept this cost must ultimately be paid by us. This is likened to “Stockholm syndrome” where kidnap victims begin to empathise with their captors. I wonder if this happens in the purchasing profession too? Imagine if a supplier comes to you and says he needs an increase because the price of oil/steel/wheat has shot up. Do you simply accept he has been a victim of market forces and unscrupulous speculators? Or do you take the time to examine his own cost base and see if he is just protecting his margin?
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