22 July 2015 - Janet Bird
Small food suppliers are the biggest casualties of the ongoing supermarket price wars, according to new research.
A report published by insolvency experts Begbies Traynor revealed the number of suppliers and growers experiencing significant financial distress has risen by 54 percent over the past 12 months from 1.052 during the three months to the end of June 2014 to 1,622 during the same period this year. A total of 89 percent (1,436) of the struggling 1,622 companies are small or medium sized.
Smaller grocers and food retailers are also suffering. The number experiencing significant financial distress has risen from 3,804 this time last year to 5,258 – an increase of 38 percent. Of these, 5,092 – or 97 percent – are small or medium sized enterprises.
With 'Big Four' supermarkets Sainsbury's, Tesco, Morrisons and Asda remaining determined to attract customers back from discount chains such as Aldi and Lidl by further cutting prices, there seems no reprieve in sight for the struggling small suppliers and grocers.
The fierce competition has already led to grocery prices falling 1.7 percent in a year and, with many food suppliers tied in to agreements with big buyers that can involve large discounts, slow payments or demands for rebates, the future seems bleak for many small suppliers and retailers.