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Beware the buyer

Joanna Blythman

1st September, 2004

Supermarkets are keen to portray themselves as loyal and supportive business partners, nurturing suppliers in their quest for the best deal for consumers.

Tesco says it is ‘committed to maintaining strong mutually advantageous relationships with our suppliers’. Asda asserts its ‘belief in good relationships, which we work to improve all the time’. And Sainsbury’s says: ‘We are very proud of the good relationships we have with our suppliers’.

To the consumer, this sounds reassuring. Occasionally, however, the mask of benevolence slips, as was the case in an interview with former Safeway chief executive Carlos Criado-Perez. Pushed as to why there was growing unrest among suppliers and complaints that Safeway was acting aggressively, Criado-Perez insisted that his firm’s relations with its 2,000 suppliers were good. But he offered an unusually forthright insight into Safeway’s current business strategy. ‘We are very keen negotiators and, increasingly, it becomes a more challenging dialogue. It’s our job to prise every penny out of suppliers. Every single penny comes either from them or the customers. We try to do business ethically, but we also want to do what is best business for our shareholders.’

Speak to suppliers directly and they will tell you precisely what they make of that. The fine words supermarket generals reel off about their dealings with suppliers do not seem to filter down the ranks to the foot soldiers who actually carry out their business and generate their profits.

One supplier described negotiating a deal with a supermarket thus: ‘As soon as the chief executive officer walked out the room, it was business as usual. The buying team was just a bunch of thugs.

The public image of the Dudley Moore-style cuddly supermarket buyer, tirelessly scouring the globe for food finds like a latter-day Indiana Jones, is wide of the mark. The typical supermarket buyer for a large multiple, the person who negotiates the detail of any business with suppliers, is likely to be in their mid- to late 20s, and is routinely changed at short notice. One minute they could be in charge of pet food, the next Christmas gifts, then ready meals or toiletries, and so on.

Even supermarket insiders sometimes recognise the problems this causes. When the small, family-owned, regional supermarket chain Booths trounced every other supermarket chain to win the title of ‘Overall Wine Merchant of the Year’ in Wine Magazine’s 2002 ‘Oscars’, it publicly attributed its success to the fact that its knowledgeable wine buyer had been in the job for four years – an uncharacteristically long tenure among the ever-changing personnel of supermarket procurement.

Many supermarkets swap buyers between departments,’ remarked Booths, ‘and this often means that the frozen-vegetable or lingerie buyer of today may well be the Bordeaux or Riesling buyer of tomorrow. This can easily lead to difficulties in telling a claret from a carrot or a hock from a sock.’

Several established suppliers told me of their difficulties when trying to present products to such inexperienced and uninterested buyers. ‘You’re in this cubicle deep in the chain’s HQ. You’re talking away passionately about your product, waxing lyrical to a 26-year-old and you can almost see the cartoon bubble coming out her head saying “yawn” or “bored”. All she wants to know about is getting the maximum sales from each square metre, and the only way she knows how to do that is by reducing wastage, increasing sales by price cutting and increasing margins,’ said one.

The wine writer Tim Atkin gave readers an insight into the world of supermarket wine buying, recounting his experience at a wine tasting. ‘Tesco buying managers have a reputation for securing the hardest bargains... One of them was given a new wine to taste... and was asked for his reaction. He sniffed the contents of his glass, tasted it and replied: “Not enough margin”.

Supermarket buying is rapidly turning into a know-nothing, profit-obsessed occupation. To get a job as a supermarket buyer, no substantive knowledge of the product category is required, and it is questionable if it is even seen as a benefit. In the words of one recruitment consultant, ‘all [the buyer] needs to know about is profit margins and doing deals’.

Buying is just a job requiring the same set of negotiating skills for each product category. One product is just like any other. By constantly moving buyers around, supermarkets can ensure that they do not become too reliant on regular suppliers, which might blunt their desire to get the best deal.

One supplier told the investigation that led to the 2000 Competition Commission report on UK supermarkets: ‘Multiples switch their buyers around every six to 12 months in order that relationships and loyalty to suppliers can be avoided. The new buyer is given carte blanche to de-list suppliers, who are frequently treated with complete contempt.’

One UK supplier told me of a chilling encounter with a new vegetable buyer. This buyer had previously been in charge of paper goods, and had been in the vegetable job for only two weeks when he came to visit the supplier. ‘He told us how he had worked in the paper department. When he came into the job, he told us, the chain was paying £13 a thousand for a particular product. By the time he’d been in there two months it was paying 75p a thousand; he had kicked out all the main suppliers and moved the chain’s margin up from 20 per cent to 50 per cent. He told us that he intended to do the same thing with vegetables.’ Failure to go along with a buyer’s requests can be disastrous.

In 2002 a story circulated throughout the book trade about a publisher whose key account executive was unceremoniously dismissed from a buyer’s office as a result of refusing to give a 65 per cent discount on the publisher’s lead spring title. The buyer was reported to have said: ‘If you are not willing to negotiate on that title, you may as well pack up now. I don’t want to see the rest of your list.’

Another supplier expressed his feelings to the Competition Commission investigation in a particularly heartfelt way: ‘On the whole, supermarket buyers and store managers are blackmailers. They are not fair, and always have their own way; hence the reason why our business is no longer trading... Thank you for giving people the chance to express themselves and show supermarkets for what they really are.’

Extracted from Shopped: The Shocking Power of British Supermarkets by Joanna Blythman published by Fourth Estate, 2004. With the pressure they are under it is no wonder that one farmer commits suicide every six days. “One winter, it was so frosty we couldn’t get the leeks out the ground. But we knew if we didn’t get them to the retailer, it would be a black mark against us and probably affect the growing programme they gave us next season. So we literally went out and chiselled the leeks out of the soil rather than tell them that we had a problem.” Surrey farmer Charles Secrett “I went to a supermarket producers’ meeting where representatives of the supermarket in question and its abattoir/processors were present. I stood up and talked about my negative experiences with the supermarket and got backing from other farmers. Shortly afterwards I was told by a fieldsman working on behalf of the supermarket and its processors that he was sorry but he could no longer come to look at my cattle. Because I had spoken out publicly, they couldn’t take my meat any more.” Devon beef farmer Richard Haddock “We had planted 20 acres of beetroot. We had lifted half of it, when suddenly the chain decided to stop selling this beetroot line. Just like that, we got a phone call saying the chain couldn’t take any more beetroot. They had given us a programme for 12 months but we had nothing in writing. All because the buyer, a 25-year-old lad, had decided not to stock it. What are you meant to do with 10 acres of beetroot all of a sudden?” Anonymous beetroot grower

This article first appeared in the Ecologist September 2004

 

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