Daily Management Review

Is Tesco-Unilever row another Brexit consequence?


10/14/2016


Disagreements on selling prices made Tesco, largest British retailer, remove dozens of names of popular products, including the popular in the country spread Marmite sandwich, from sale in its online store.



British-Dutch corporation Unilever tries to approximately 10% rise wholesale prices for a number of popular goods. The company explains its decision by depreciation of the British pound.

TESCO’s Head Dave Lewis says the company has not raised prices for the time elapsed after the referendum. "On the contrary, our prices have continued to decline. I do not know how the exchange rate will affect cost of raw materials, it all depends on the level. But I can give a commitment: in our network, we will not tolerate inflation in retail prices, if he can avoid it. "

Unilever aims to compensate for the rising cost of imported raw materials, Reuters reported. Many experts have warned of a rise in price of products due to collapse of the pound.

What do buyers in London think?

"If prices rise, then people with low incomes will be having hard times. The situation is already not easy, and Unilever said that increase is linked to the UK leaving the EU. But I do not personally see any connection."

"I think that people really do not understand for what vote when they supported Brexit. They voted for a number of reasons, but did not take into account the economic consequences. Nothing to be surprised about now".

Unilever wants to raise prices in the four largest UK retailers. Supermarkets, in turn, say they do not see a reason for this, as most of the products are produced in the country.

On Thursday evening, Unilever and Tesco have managed to agree. Report of the official supplier of goods stated: "Unilever is pleased to inform that the situation with Tesco in the UK and Ireland has successfully been settled. We worked together on the problem and want to assure customers that all of their favorite products are back to the shops. We are very grateful to all those who missed us."

Tesco’s official press release says: "Our customers always come first for us and we are happy that the situation was resolved in their favor."

Rapid resolution of the dispute is good news for Dave Lewis, who previously held a senior position in Unilever. Shares of Tesco fell 3%, and shares of Unilever - by 3.4% as investors grew concerned about photos of empty shelves posted on social networks.

However, analysts the same social networks helped the retailer's reputation since Tesco has been portrayed as a champion of low prices for its customers. 

Soon, large chains will have to enter into an uphill battle for low prices with retailers like Aldi and Lidl, who sell goods under their own brand.

Downing Street refused to comment on how retailers and suppliers have to respond to decline of the pound. 

source: euronews.com, bbc.com






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