Irish

Saturday 26 July 2014

Memo shows Tesco kept switch to UK suppliers secret

Anne-Marie Walsh, Industry Correspondentr

Published 29/05/2009|00:00

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BRITISH supermarket chain Tesco tried to hide its new policy of buying directly from UK suppliers from Irish customers.

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An internal report, seen by the Irish Independent, said that ensuring its policy of taking deliveries directly from UK suppliers went unnoticed was a key objective.

The Tesco policy document said the objective of its new policy was "to deliver an efficient value chain on key categories, that is invisible to the Irish customer and the UK Commercial team, but allows Tesco Ireland to utilise Tesco UK scale in terms of its customer offer and trading terms".

According to the document, which was presented to suppliers, 40pc of Irish consumers were "actively shopping" in Northern Ireland.

The document aimed to explain changes in its policy on sourcing branded goods directly from the UK rather than using local distributors.

Tesco's policy has caused outrage among suppliers who claim they are facing financial ruin due to its bid to beat Northern competition.

The chain is engaged in a price war near the Border to prevent shoppers heading North due to the devaluation of sterling against the euro.

It cut its prices by up to 22pc in the border region earlier this month.

However, Tesco is aware of the effect of its action on Irish suppliers.

An internal survey of suppliers revealed that 63pc strongly believed recent changes in its trading and sourcing policy had put jobs under threat.

The document said comparisons between its prices and those up North had highlighted savings in excess of 40pc in Northern Ireland versus the Republic.

Afraid

A spokesman for SIPTU, which represents hundreds of distribution workers, said suppliers were afraid to go public about the effect of the chain's policy for fear of losing further business. "Tesco obviously wants its policy to fall below the radar," said Branch Organiser John Dunne.

A spokesman for Tesco said: "It is our intention to bring new lower prices to Tesco customers across Ireland.

"As part of this process of lowering prices we are sourcing centrally, internationally branded goods which were previously imported by third parties. Customers will now be able to get the very same products at considerably lower prices.

"Irish produced products will continue to be sourced in Ireland. Tesco Ireland is fully committed to supporting Irish producers and each year the company buys almost €2bn of food and drink products locally."

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