Indies may gain from Tesco-Booker merger price war

Tesco Booker
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A price war with suppliers following the £3.7bn Tesco-Booker merger could play into the hands of independent retailers, RN has been told.  

The Competition and Markets Authority (CMA) announced its approval of the deal on 20 December, with the regulator concluding the merger would have no negative impact on pricing or competition. 

A number of wholesalers are now considering an appeal to the decision and say combined power will result in prices being driven down. 

However, store owners have welcomed this prospect. Retailer Raj Aggarwal, of Spar Wigston in Leicester, argued a price war would benefit independent retailers. He told RN: “Tesco isn’t the giant it used to be and suppliers follow the shoppers.

 “Tesco and Booker don’t have the option of refusing to stock goods from suppliers if they can’t get them at lower prices. Suppliers will take their business elsewhere and this can only be beneficial for independent retailers,” he added. 

Kay Patel, of Global Food & Wine in Stratford said: “If suppliers do get squeezed out, they may try to minimise damage by improving the quality and service delivered by their reps. 

“I can imagine the reps will work harder to tell independent retailers how to make the most of promotions and merchandising to boost sales. This is all good for independent retailers.”

Among those wholesalers considering an appeal is AG Parfett & Son’s chairman Steve Parfett who called the CMA’s decision “perverse and pathetic”. 

“I’m thinking of appealing to the Competition Appeal Tribunal and I would encourage others to do the same,” said Mr Parfett. “Tesco-Booker will have the combined power to demand more goods at a cheaper price from suppliers. Other wholesalers won’t be able to keep up and they’ll be wiped out. A lot of suppliers have put similar worries to the CMA, but are reluctant to come out because they fear the repercussions from Tesco.”

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By betterRetailing ⁣ Avatar
By betterRetailing ⁣ 28 Dec, 2017

Comments

4 comments
  • By Observer 30 Dec, 2017
    Reply

    Watching the way the sector has developed over the past decade suggests to me that the switched on retailer who is prepared to invest in their business and properly pass on promotions to the consumer will survive.The £ wise, penny foolish Cash &Carry merchants will always bump along at the bottom.These people NEVER take into consideration the true cost of their sometimes daily trawl around the various outlets.Now more than ever ,the store owner needs to be in their business and listening to and reacting to the customer.Loyalty .often taken for granted is now hard won.

  • By GEORGE 29 Dec, 2017
    Reply

    I will like to start by saying as a grocery store retailer, that was getting a delivered service from p&h , it was the worst service I had ever experienced from a wholesaler in near 30 years in business, well anyway what had happened to me, was I had to start getting stock from cash n carry's. in my experience in shopping in cash n carry's is they are, way out off touch with todays retailers. short dated stock/ out of stock products and chill barely visible plus who on earth still buys frozen food like their shopping at Iceland (stock sold in single units rather than cases). it is these cash n carry's that are now complaining they just let the years roll on without looking ahead and investing in their own futures, that they, now have smelt, the coffee !!! we are at that pinnacle moment ,when this industry is about to turn , and turn for the better. don't blame manufacturers blame yourselves(cash n carry) for sitting idle and relying on independents who just got raw deals in cash n carry's.

  • By Andrew Whyte
    By Andrew Whyte 29 Dec, 2017
    Reply

    IMHO, any indie store owner that thinks that Tesco having even more leverage is a good thing is naive in the extreme.

    Their extra buying power will be used to keep their own store prices down, but I cant see much chance of a lot of that benefit being passed down to indies - it is mre likely to be used to inflate indie prices making them appear price prohibitive, benefitting Tesco stores and disbenefiting indies

  • By Steve Bassett 28 Dec, 2017
    Reply

    Steve Parfett calls for protection against competition.

    Oh! Ask for me as well Steve. I’d like no competition for 15 miles radius of my stores.

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