According to Unilever CFO Graeme Pitkethly, the price spat this week between Unilever and Tesco has been resolved; for now that maybe true but to think that this will be the last time we witness a supplier and a retailer come to blows over pricing would be to kid ourselves. The dye has been cast.
In a nutshell, Unilever wished to pass on a seemingly arbitrary 10% price hike in the cost of its products to the retailers as a direct result of the weakened pound. This of course was to ignore the fact that prices weren’t similarly reduced when the pound was strong (a lesson learnt from the oil companies perhaps?)
Tesco CEO Dave Lewis, ex Unilever Exec of course, wasn’t having any of this and delisted many Unilever products from Tesco online and stocks in store were allowed to dwindle. The stand-off lasted several days but happily, unlike Govia and the RMT, it was resolved before the nation really did come to a standstill, starved of Marmite and PG Tips.
But of course nothing is quite as it appears. Tesco is clearly in a different place today than it was two years ago when Dave Lewis took over at the helm. The brand was toxic and what Lewis realised was that this urgently needed repairing if Tesco were to recover ground in the face of the relentless march of the discounters. Unilever was a heaven sent opportunity.
In a recent interview with retail business consultants PatelMiller, that most respected of retail analysts, Richard Hyman said this;
“The single most important thing that they (retailers) need to do, is to strengthen their brand relationship with their customers”
In this latest dispute with Unilever, it would appear that Lewis has taken this to heart. Whilst the pricing issue was clearly fundamental and needed addressing, by far the most important aspect for Tesco and Lewis was the PR opportunity it presented. Whilst many consumers will know of Unilever, they may not be as likely to know all their brands, much less care. What they care about is the availability of their favourite products – and in the face of a corporate bully, Tesco has stood up for the little man; who would have thought it just two short years ago – Tesco – champion of the consumer?
As has been said many times elsewhere, brands are best.
Andrew Busby is a retail specialist, founder of Retail Reflections & The Retail Advisory Board