The negotiations between Colruyt Group and its suppliers are tough, but always respectful, COO Marc Hofman explains. “We sometimes see inexplicable differences between producers.”
“No ad hominem attacks”
The end-of-year talks between the supermarket chains and their suppliers have caused quite a stir in the media in recent weeks. Manufacturers want to impose price increases, but retailers emphasise that all partners in the chain must bear their share of the rising costs. Belgian market leader Colruyt Group, in particular, has attracted attention as a result of some recent delistings. However, COO Hofman resolutely refutes the insinuations that the retailer is abusing its dominant position during the current negotiations.
“The negotiations that Colruyt Group conducts with its business partners are always respectful. We do not go into details and speculations regarding individual negotiations, but emphasise that we do not use ad hominem arguments”, he told RetailDetail.
The negotiations are sometimes tricky, he admits. However, there are good reasons for that: “Just like every year, we have many constructive meetings with our suppliers in the interest of our customers, and those meetings can be pretty tough. Costs are rising all across the chain (raw materials, energy, transport, etc.), leading to a series of price increases for suppliers. More than ever, we are challenging our partners on this because we see large and inexplicable differences between producers of similar products.”
Long term perspective
Moreover, Colruyt Group does not want to reduce the negotiations to the current discussions on price increases in the short term. The company also looks at the developments in the longer term: “We are also discussing what will happen when this exceptional combination of cost increases comes to an end; what will happen to the prices when the energy costs and the raw materials decrease again? We also want to make transparent agreements on this in the customer’s interest. As a result, this year’s negotiations are tougher than in previous years and also take longer.”
“We have also noticed for some months that large producers, on their behalf or through their federations, have been conducting campaigns to make it acceptable to pass on cost increases to the end-user. In our opinion, this approach does not take the consumer’s long-term perspective into account: what will happen to the prices when the costs go down? Think about energy prices, raw material prices and so on.”
Ultimately, the consumer’s interests come first in these negotiations, Hofman states. “Colruyt Group always wants to find solutions to which all parties can agree, but in which the interest of the consumer is also taken into account. After all, Colruyt Group holds the consumer’s wallet very close to its heart.”
