Coles pressures suppliers to rein in costs

COLES has called on its food and grocery suppliers to work harder on cutting costs from their businesses amid soaring shelf prices, as the supermarket operator is also forced to devote even more staff and resources to cope with the flood of supplier price rise requests now engulfing its head office.

In a fresh move to put a foot on food inflation, which is running at almost 8 per cent, the supermarket has reminded its suppliers that every business must “turn its mind” to cleaving costs and that while rising input costs fuelled by steeper commodity, transport, energy and packaging prices would be considered, Coles would not compensate suppliers for higher marketing costs or fixed parts of their business.

Coles has told its suppliers it would also reserve the right to negotiate price hike requests, or block them completely, if the supermarket feared a higher shelf price would have a negative impact on shoppers or cause a slide in sales.

Even if a price rise is waved through it will take as long as 12 weeks for the new price to hit the supermarket aisle, suppliers have been reminded.

In a recent series of alerts sent to suppliers, the nation’s second-biggest supermarket chain detailed its strategies to help combat inflationary pressures by asking suppliers to share the burden. “All businesses will incur impacts to the cost of doing business at some point. Every business needs to turn its mind to how it can remove costs from its operations. This is something that Coles continually does and is a fundamental part of our strategy.” Coles has pledged to respond to price rise requests within 30 days, and to keep supplier commercial information confidential.