Germany’s largest retailer Edeka wants to remain steadfast in the fight over the pricing of brand manufacturers. Currently, there are 17 corporations that do not supply Edeka, said CEO Markus Mosa. According to a current report by the news channel ntv from April 26, 2023, it is said that the “greed” of the international food corporations is not yet subsiding. Suppliers to the Edeka association, which consists of 11,000 stores, include corporations such as Procter & Gamble, Mars and Pepsi as well as parts of Henkel, Schwartau and Unilever.
The pricing of the brands is even less comprehensible than last year, as many raw materials for detergents, but also wheat, oils and fats have become cheaper again, says Mosa. The branded goods industry maximizes its results and prefers to forego delivery. The background is a dispute that has been smoldering for months between retailers and leading brand manufacturers over prices.
It’s about power issues: Who can assert themselves in the pricing strategy?
“Constructive cooperation between suppliers and trade looks different”, says pricing expert Prof. Dr. Hans-Christian Riekhof. “When a retail group reports that there is a delivery boycott by 17 well-known brand manufacturers, then this is a phenomenon that we do not encounter every day – and that consumers also register in view of the gaps on the shelf.”
Obviously, one of the parties feels disadvantaged and cannot agree with the prices or conditions offered – there is no negotiation result. Riekhof: “In negotiation management, this is called ‘BATNA’ (Best Alternative to No Agreement). It’s about power issues: who has the upper hand and can ultimately assert their ideas?”
What do the pricing strategies for own brands look like?
Retailers like Edeka have already started years ago to make themselves more independent of the brand manufacturers by building up their own brands. However, predominantly in the lower price ranges, Riekhof continues. He recommends that retailers urgently review the pricing strategy for their own brands.
“From our pricing projects for retail, we know that the price gap between the retail brand and the manufacturer brand can be significantly reduced from the customer’s perspective. Here are untapped profit potentials for retail. Good that the manufacturers force the trade to review their price architecture.”
(Read also Riekhof on Pricing on the subject of price architecture).
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