Asda has dismissed accusations that it has demanded large up front cash payments from suppliers, but confirmed that it is seeking to bring the price it pays for products in-line with the more favourable deals negotiated by rival Tesco.
Independent research suggested that Tesco has a 3% advantage over Asda in the price it pays suppliers generally and a 2% advantage on promotional spending, claimed Asda’s chief operating officer Dave Cheesewright. “We are always looking for ways to try to improve that gap, provided we can do it in ways that are also beneficial to suppliers.”
He added: “We are asking [suppliers] for investment in areas where they feel they are going to get a return from it as well.”
As part of Asda’s Investment for Growth programme, Cheesewright said that he was looking for prices cuts, although would not be drawn on specifics. He said negotiations with suppliers this year had been “condensed into three of four weeks”.
He added: “I can’t tell them what to reduce their prices by. It’s part of my and my team’s job to try to close [Tesco’s] advantage.”
Cheesewright claimed Asda had a good record in its dealing with suppliers - although he would not comment on its controversial ending of a contract with Ferndale Foods last year, before he came on board. “Over the past 10 years, we’ve got a track record of delivering substantial growth for our suppliers … we have had many mutually beneficial relationships with suppliers for a long period of time; we will continue to do that.”
Cheesewright also said that the price cuts being sought were only a relatively small part of its overall Formula for Change strategy: “There are other areas that are equally important to our customers,” he said.