IPA slams supermarket price promotions

Supermarkets are causing “collateral damage” to brands with inefficient price promotions launched in their pursuit of market share, according to a report published by the IPA today (4 February).

The Institute claims price promotions are “destroying brand strength and brand loyalty, while allowing retailers to win valuable market share at the expense of manufacturers and suppliers of fresh produce”.

In a statement, the IPA says that Institute of Sales Promotion (ISP) research shows that £14.04bn was wasted on price promotions in 2009, with 90% of the cost being fronted by suppliers not retailers.

The report, entitled “Pricing for the upturn. How brands can fight back”, also includes contributions from Taylor Nelson Sofres (TNS), the Institute of Sales Promotion and the British Brands Group and comes on the same day that the Grocery Supplier Code of Practice (GSCOP), which aims to protect suppliers, comes into force.

Hamish Pringle, IPA director general, says it welcomes the code, in particular its scrutiny of the level of ordering products at promotional prices.

The GSCOP is regulated by the Office of Fair Trading and applies to the UKs 10 biggest grocery retailers, replacing a previous code, which only applied to the “big four”. It gives suppliers access to independent arbitration and aims to protect relationships between retailers and suppliers.

Stephen Robertson British Retail Consortium director general, says of the code: “Retailers want successful, sustainable long-term relationships with suppliers. How else would they get the quantity and quality of goods their customers want?

“The effort and money retailers are putting into demonstrating they meet the Code’s requirements and informing suppliers shows they accept their responsibilities as major players in the supply chain.”

“The Code is regulated by the OFT and gives suppliers more protection and a new right to independent arbitration if they’re unhappy. It will strengthen relationships and give suppliers the confidence they need to plan for the future.

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