On 27 June, the heads of Tesco, Asda, Morrisons and Sainsbury’s sat before the UK Government’s Business & Trade Committee to answer questions around food and fuel inflation and what they are doing to bring prices down.
Rhian Bartlett, Food Commercial Director, Sainsbury's; Kris Comerford, Chief Commercial Officer, Asda; David Potts, CEO, Morrisons; Gordon Gafa, Commercial Director, Tesco were the supermarket heads in the room. Here are the 5 top talking points from the session.
1. Food prices will continue to rise - just more slowly
Food price rises have now dropped to 8.7%. So while it is a drop, it the prices consumers pay will continue to rise. Each supermarket head was asked to account for the price rises. They blamed produce shortages, labour costs (Sainsbury's), structural challenges (Asda), the avian flu and an oversupply of pigs for rising food costs (Morrisons).
When asked about the egg shortage last year, Rhian Bartlett, Food Commercial Director, Sainsbury's, admitted that they primarily dealt with packers rather farmers, which caused problems in the UK supply chain. This meant they had to bring eggs from Italy.
2. Convenience stores are not stocking enough budget lines
A recent Which report claimed that some UK consumers lived in "food deserts," where they couldn't access a "decent range of cheap, healthy food" from the supermarkets smaller local outlets. The committee asked about this.
Gordon Gafa, Commercial Director at Tesco, the largest supermarket operator in the convenience space, said they assessed their Express prices on a weekly basis and had rolled out Clubcard discounts in this area last year. He did make the point that consumer brand loyalty often led to a need to stock branded items rather than cheaper own-brand products, but was happy to reassess if there was anywhere they weren't "getting it right".
Sainsbury's Food Commercial Director, Rhian Bartlett, said they stocked these stores according to the consumer mission - which according to their data was for lunchtime and dinner tonight shopping. They also stocked these stores according to their loyalty data.
David Potts, CEO, of Morrisons pledged to add more Savers items from their budget range into the McColls local stores, which Morrisons are currently bringing out of administration, to enter the local supermarket space.
3. There is a disparity in fuel prices across the UK
The four UK supermarkets at the committee – representing 44% of the forecourt share in the UK - committed to apply a more transparent model around pricing. This would be similar to the pumpwatch scheme in Northern Ireland, which currently makes fuel there on average significantly cheaper than the rest of the UK.
5. No one wants the introduction of a price cap for essential items
When asked directly if they would advocate for the introduction of food price caps on essential products such as baby milk, all four supermarket representatives were against it. Instead, they all believed that competition and self regulation were better options.
5. The delay around the HFSS legislation split the group
Discussing delays in the implementation of the recent HFSS legislation, Sainsbury’s expressed frustration at the slow roll out of the changes. The supermarket already no longer run multibuys in this areas, though the head of the committee did flag the fact they offered promotions on HFSS items to their loyalty customers. The rest of the panel said they were happy to follow the government timetable.
You can watch the entire session here.
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