Tesco and Sainsbury’s bosses have issued a stark warning over the impact of inflation on retailers and consumers.
Speaking at the annual IGD Big Debate event yesterday, Matt Davies, UK CEO of Tesco, said: “As people are aware, we have had a lot of work to do across our supplier partnerships, and nothing is more important to us than the relationships that we are rebuilding with our suppliers.
“Inflation is a bad, bad thing in food and we will do everything we can do on behalf of customers across the UK to make sure that inflation of food is kept to a minimum.
“Everyone should be very clear on how damaging inflation is to our economy, to retailer businesses and manufacturing businesses, and how lethal it can be for millions of people who are struggling to live from week to week.”
Mike Coupe, CEO at Sainsbury’s, reiterated concerns over potential price rises. “We’ve seen significant devaluation of the pound but we’ve got commodity price movements the other way. If you look at fuel, when the pound devalued, oil prices also fell, pump prices went up by a couple pence, but by no means as far you might have expected in the circumstances,” he said.
“We operate in a world market where supply and demand will also adjust itself and products will be sourced from different areas of the world to mitigate to some extent. There are inflationary pressures on the industry and it would be wrong to shy away from them.”
Elsewhere, Michael Fletcher, commercial director at the Co-operative, commented on the areas of growth in the convenience sector.
He said: “Price is no longer the key determiner when shoppers come into store, a lot of the primary drivers are the quality of fresh food, so getting that right is key.
“Meals for tonight is also a growing mission for our sector as many people don’t know what they are going to have for dinner that night so it is about offering them a simple solution and inspiring them while staying competitive on price.”
Fletcher was also optimistic on the future of convenience in the digital age: “Ironically online growth is our friend, as shoppers move to an online shop for their big shop that often drives an additional top-up shop in convenience. As far as we can forecast, we see an unstructured lifestyle is key to driving convenience as the sector is forecast to grow by 2.2% in the next three years as consumers go to convenience stores to get inspired for things like meals for tonight,” he said.
The event closed with an announcement from IGD that Leendert den Hollander, former vice-president and general manager of Coca-Cola European Partners, had been formerly appointed as President of IGD, taking over from Andrew Clarke.