Trade Relations Under Pressure: Coping with Change in Irish Grocery
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 | Trade Relations Under Pressure: Coping with Change in Irish GroceryThe grocery sales function is changing, with head office negotiation and category management taking the place of personal relationships at store level. Suppliers are under acute pressure, with any price rise liable to be balanced by higher LTAs. The Groceries Order may be amended to reflect net prices. The future is likely to be increasingly difficult, especially for smaller suppliers; but those willing to adapt are already scoring some successes. This report is based on director-level interviews with a wide cross-section of Irish grocery suppliers. |
Tesco have set the agenda, with other retailers following, and the impact of the discounters has reinforced the price message and seriously eroded traditional brand loyalties. Ireland is becoming part of a larger global market, yet Irish prices still invite unfavourable international comparisons. All but one of the major retailers have changed or are changing to centralised distribution, yet on-shelf availability problems and Dunnes' continued needs have made it impossible to dispense with representation at store level.
Suppliers need to understand the retailers' businesses more than ever before. Staff retraining is becoming increasingly important. But ex-salesmen do not necessarily make good account or category managers, even after training. There is now a national shortage of the right kind of people. Nevertheless forward-thinking suppliers claim that category management partnerships are developing well.
Tesco has been at the forefront of change and despite some complaints of arrogance, most suppliers feel that their influence has led to a new professionalism in the industry; Tesco also form a brand bulwark against the discounters. Dunnes continue to go their own way - but for how much longer? Will Wal-Mart enter the Irish market? The Groceries Order seems very unlikely to remain unchanged, but its new form remains uncertain. Many suppliers are pessimistic about the future, but UK and global experience suggests that major brands will adapt and smaller suppliers able to exploit the right niches will continue to prosper.
Published: September 2005
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