review

Many believe the old adage that it is difficult, to prove a negative. Likewise, it has not been that easy for the Federation of Wholesale Distributors to provide the Competition Commission with proof positive that the multiple supermarkets extract disproportionately better terms from suppliers than those available for wholesalers.

It is generally accepted throughout the trade that these unfair price differentials are a fact of life that distort the market. But how do you get to the truth of the matter?

Well, FWD and its allies in the independent retail channel recently conducted a research project that provides the clearest indication that the Big Four do indeed benefit from lower prices. And this was accomplished simply by looking at their openly available shelf prices.

What we did was to collate several wholesalers’ buying prices on more than 300 products that are sold in all sizes of grocery retail outlets. These were then compared to the selling prices of the same products in three of the major supermarkets. The results were very revealing.

They indicated that 10% of the products sampled sold at a supermarket are cheaper than the buying price that a wholesaler supplying the independent trade can achieve from the suppliers. What is more, 74% of the items sold in supermarkets are sold at prices that suggest the Big Four obtain lower buying prices than the independent sector.

These findings have now been passed to the CC as evidence for its on-going inquiry into the grocery market.

In a previous inquiry in 2000 the CC found that wholesalers paid “much higher” prices than the major supermarkets – on average some 14% more than Tesco paid for the top five lines from 26 major suppliers. So, it was with incredulity that FWD learned from the CC’s emerging thinking paper this January that a preliminary analysis of price data from 15 suppliers suggested that no differentials now existed. The new study provides a compelling rebuttal to this and clearly shows the CC that it needs to do more work and delve deeper into the murky area of price differentials.

Meanwhile, this is the last issue of ProWholesaler before the nation goes smoke free in public places on July 1. Recent Government research showed that 41% of businesses in England do not realise that smoking rooms will need to be closed and more than half are unaware that work vehicles will also be covered by the legislation. Compliance guidance can be found at [http://www.smokefreeengland.co.uk/resources]

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