Page last updated at 03:43 GMT, Saturday, 17 October 2009 04:43 UK

Supermarkets 'hurting suppliers'

Shopper in supermarket with basket
Suppliers have long complained about heavy-handed tactics by supermarkets

Aggressive price-cutting tactics by supermarkets could result in the loss of tens of thousands of jobs in the food industry, a union has warned.

Unite has accused retail giants of driving down suppliers' profits.

Deputy general secretary Jack Dromey said: "The supermarkets have immense power but they do not exercise that power responsibly."

But the British Retail Consortium said the stores were just trying to get the best value for their customers.

Andrew Opie, the BRC's director of food and consumer policy, said: "It's not in retailers' interest to put UK businesses out of business, we want a sustainable long-term relationship with suppliers."

They have this mantra that the more they squeeze us, the more efficient we become - and if that means moving production abroad then so be it, they don't care
Anonymous supplier

Manufacturers and suppliers have long complained about heavy-handed tactics by supermarkets as they strive for lower prices.

One supplier who did not want to be identified told the BBC they were regularly put under pressure by large supermarkets.

"You just get an e-mail or a letter demanding an immediate cut in costs," the supplier said.

"They have this mantra that the more they squeeze us, the more efficient we become - and if that means moving production abroad then so be it, they don't care."

As well as driving the product costs down, it is typical for suppliers to have to pay tens of thousands of pounds for prime positions in supermarket aisles.

They fund deals such as 'buy one get on free', and they must pay for delivery and spoiled goods.

Some suppliers say they are asked for lump sums, effectively to keep their products on the shelves.

'Bad feeling'

James Ball of the Grocer magazine said: "Supermarkets will tell manufacturers to be cheaper, tell them to hand over charges for delivery, promotions for refunds, and they will do anything to keep the prices down."

The Competition Commission has asked the government to appoint an ombudsman to ensure the supermarkets play fair.

Peter Freeman from the Competition Commission said: "There was a lot of complaint, bad feeling, a lot of aggravation - a so-called climate of fear, with smaller suppliers afraid to come forward.

"We can't change the climate but we can make it easier for people to complain anonymously."



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