Irish suppliers have "real concerns" about recent changes in the Irish retail sector, particularly the acquisition of Quinnsworth by Tesco, according to the chief executive of An Bord Bia. Mr Michael Duffy, addressing a meeting of the Leinster Society of Chartered Accountants in Dublin yesterday, said suppliers were concerned about where purchasing decisions would be made, whether the Republic would be run as a "region" within the British network and about the development of private label sales and related consequences for Irish brands.
Mr Duffy added that any new centralised distribution structure would also concern suppliers.
He said there would be several possible consequences due to the increasing dominance of large multiples. There might be a reduction in the number of suppliers, a growth in "own brands", greater concentration in the market and growth in home shopping. "We should not underestimate the scale and extent of these changes. Their main implication is the evolution of supplier partnerships, which involves adopting a collaborative approach towards the retailers maximising customer satisfaction," he stated.
He said, despite concerns about "the retail revolution", the ability of Irish companies to compete in the world's most demanding markets should not be underestimated.
He said suppliers would lose out unless they were prepared to consider how the product added to the image of the retailer. "They must try to find products that support this and mark the retailer as being substantially different from other chains. Remember the average multiple grocery store in Britain carries up to 30,000 product lines," he said. Food companies wishing to survive in the new climate would have to move from selling the products they manufactured to marketing their capability to supply the product. In addition, they would need to focus on and develop strategic supplier relationships with key multiple retailers.
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