retail news in context, analysis with attitude

The Financial Times reports that Tesco has responded to price increases by Unilever in the UK by "removing Unilever products from its website and warning that some of the items could disappear from shelves if the dispute dragged on."

The price increases have been taken by Unilever because of weakening currency in the UK as a result of the Brexit vote, with the story noting that "Unilever has demanded steep price increases to offset the higher cost of imported commodities, which are priced in euros and dollars, according to executives at multiple supermarket groups."

The irony, FT writes, is that Tesco CEO Dave Lewis is "a former Unilever 'lifer' who ran the Anglo-Dutch company’s personal care business, overseeing brands that include Dove soap, Signal toothpaste and Tresemmé shampoo. He had been seen as a potential successor to Paul Polman, chief executive of Unilever, before he jumped ship to Tesco two years ago."

The paper writes that "Lewis signalled last week that he was limbering up for a fight with suppliers that tried to use the fall in sterling to push through price increases. He said many of them had failed to pass on currency benefits to consumers when sterling was on the way up, and that he was 'uncomfortable' with efforts to raise prices on the way down ... An executive at another British supermarket group said Unilever had threatened to cut off its entire supply unless it agreed to an across-the-board price increase of 10 per cent. He said the retailer would consider banishing Unilever products from its stores rather than comply with the ultimatum."
KC's View:
I have two reactions to this story.

One is that I always sort of admire it when retailers position themselves as being agents for the consumer rather than sales agents for the manufacturer. I just think it is a better place to be ... and if that means occasionally delisting products to make a point to both constituencies, I'm okay with that.

Second, I have to wonder if Tesco passed on currency benefits to consumers when the sterling was on the way up. Just curious.