Famous brands plot to cut out supermarkets

Household names will sell direct at lower price

HoUSEHoLd names are planning a shopping revolution by cutting out supermarkets and selling direct to consumers.

in a move that could slash consumer bills, hundreds of popular products could be sold straight to customers through a new website.

it would bypass mainstream supermarkets, allowing firms such as Unilever, Reckitt Benckiser and Mars – which are understood to have signed up to the initial proposal – to cut the costs of some of their leading products.

And the service, being developed by tech company inS, poses a new threat to supermarkets already faced with rising numbers of shoppers going online and a push by Amazon to sell groceries.

Bosses behind the project say it will help consumer goods firms fight back against an onslaught of cheaper ‘ownbrand’ products, which are squeezing their market share.

But one analyst warned it could spark a war between supermarkets and manufacturers.

Research by Kantar Worldpanel shows the ‘ Big Four’ – tesco, Sainsbury’s, Asda and Morrisons – control almost 70pc of the groceries market.

Peter Fedchenkov, the founder of inS, accused UK supermarkets of ‘ abusing’ their position, which meant they could dictate pricing, packaging and promotions, and even threaten to remove products from the shelves if their demands were not met.

He added: ‘our platform would let manufacturers sell directly to customers and run bespoke rewards programmes, much like Air Miles but more advanced, to save them money. today’s grocery supply chain is highly inefficient and so, by cutting out parts of it, we can reduce costs.

‘in the UK you have 25m households and 7,000 manufacturers but just four big retailers with 70pc of the market – that gives so much power to the retailers.’

Last year a row broke out – dubbed ‘Marmitegate’ – after tesco pulled Unilever’s products from its website and threatened not to replenish supermarket stocks. it came after tesco refused to pay an extra 10pc for goods demanded by Unilever.

the inS website is being developed and is due for a trial run, probably in Moscow, next year. Fedchenkov said it could be rolled out globally in 2019, with the UK seen as a core market.

nick carroll, a retail analyst at Mintel, said the proposal was a big challenge to supermarkets and could spark a showdown. He said: ‘if big brands got on board with this, the danger is they could then alienate their supermarket customers, who could decide there is no longer space for their products on the shelves.

‘the UK has one of the most advanced online grocery markets and it is still only worth about 6.5pc of the grocery market.’

A spokesman for the British Retail consortium, which repre- sents the Big Four and other retailers, said: ‘this platform will no doubt encourage retailers to continue to innovate to deliver the best deal possible for consumers, who are the real winners from the intense competition in British retailing today.’

Mars yesterday confirmed it had signed a memorandum with inS but did not comment further. A source close to Unilever last night said it was looking at whether it could work with inS, but added: ‘there are no plans to do this in the UK or elsewhere at this time.’

A spokesman for Reckitt Benckiser claimed ‘no agreement’ had been made with inS.