Tesco “Black-Margin” Strategy to Reduce Costs

According to The Grocer, Tesco has adopted a “back margin” strategy as it charges suppliers for promotional advertising space in order to reduce costs amid rising inflation across The supply chain.

The supermarket giant has been using cost-price inflation (CPI) negotiations with suppliers as leverage as it has started to increase margin calls.

Back-up deposits are flat fees that retailers collect from suppliers to support promotions or secure in-store placements. They are separate from “back margin” payments (the difference between the cost price and the resale price) that consumers know.

While it was common at Tesco, Dave Lewis, the previous boss, had largely abolished the practice of charging suppliers for promotional advertising, in favour of a move towards transparency, consistency and everyday low prices for consumers.

Retailers are going to adopt electronic shelf labels in their stores, reducing labor cost and liberate from paper tags switching time and time again!

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Post time: Jun-08-2022

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