business news in context, analysis with attitude

A report from City AM in the UK says that Tesco has sent emails to some 5,000 of its suppliers "demanding price cuts due to the fall in commodity prices, and told those who refused to comply it may no longer support their products." In other words, their products could be removed from Tesco's store shelves.

The move by Tesco comes as "prices for commodities in Europe such as sugar and corn have fallen in line with oil prices in recent months," dropping precipitously.

It also occurs as Tesco is facing a new investigation by Britain’s Groceries Code Adjudicator, who has said that there may be evidence that Tesco deliberately and illegally delayed payments to suppliers in a systematic fashion. And that is on top of other probes being conducted into Tesco's admitted overstatement of revenues and understatement of costs as a way of puffing up its books.
KC's View:
I have no idea of what may legal and illegal, especially in the UK. But I wonder if there is a point at which some of this stuff actually helps Tesco's image, creating the perception that it is serving as an advocate for the shopper and not a sales tool for suppliers, and has as its goal lower prices that will allow it to be more competitive with the likes of Aldi.

Of course, that argument sort of falls apart if Tesco's intention is to get lower prices from suppliers as a way of plumping up its margins. But to be clear, there is a difference between bullying and advocacy.