Tesco demands large supplier discounts as it preps for ‘price war’
Big Four Grocer Tesco has reportedly demanded discounts of up to 50% from suppliers as it prepares for a price war with Aldi and Lidl.
According to the Sunday Times, Tesco has given suppliers up until Friday 10 June to accept the terms which will likely be funded by abandoning a number of promotions.
The demand, which one unnamed supplier told the paper was “offensive”, comes after Tesco pledged to match Aldi’s price on over 500 products in an attempt to continue to gain market share on the discount grocer.
A Tesco spokesperson said: “We are committed to open, fair and transparent partnerships with all of our suppliers.”
The news comes as Tesco saw like-for-like sales increase by 8.2% in the first quarter of trading despite the pandemic and nationwide lockdown.
In the quarter ended 30 May, total sales were up by 9.2%, while online sales soared by 48.5% as more shoppers shifted online.
The group doubled its online capacity in a five-week period, and is now delivering over 1.3 million orders per week. Across the quarter, the group delivered a total of 12.6 million orders, with its online grocery business growing from 9% to over 16% of its total UK sales.
The supermarket’s convenience business also saw sales up by 9.5%, including a “particularly strong” performance from its One Stop estate.
