Supermarket chains question supplier price hikes, demand they ‘prove it’
40-year high inflation impacting consumer spending behavior
Grocery chains getting picky over supplier price hikes: ‘Prove it’
FOX Business’ Lydia Hu talks to a supermarket exec and guru who say suppliers are ‘taking advantage’ of inflationary prices.
Supermarket chains and grocery gurus are starting to push back on the sticker-shock price hikes food suppliers have been passing on.
"They think a lot of suppliers are taking advantage," Giant Eagle chief merchandising officer Don Clark told FOX Business’ Lydia Hu on Wednesday. "They'll come and say, 'Hey, we're about to increase our prices 10%,' but like, prove it."
While consumers have changed their shopping habits in the face of inflation, grocers are following suit by being selective of which products and brands they carry.
One Morton Williams employee in New York also told Hu that they’re in a second price negotiation phase with a pasta sauce company they say will lose prime shelving spots and promotions if the company can’t demonstrate exactly how their costs have gone up.
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"They have to come back and prove that out for us to then say, ‘Okay, that makes sense, we’ll pass those through,'" Clark continued.
Supermarket brands are telling their food suppliers to "prove it" when passing on price hikes, or lose prime shelving spots and store promotions, in FOX Business' Lydia Hu's latest report on "Varney & Co." Wednesday, June 8, 2022. (Getty Images)
Experts claim now is a good time for retailers to hold this leverage, noting they have growing power where consumers are watching how every last penny is spent and not being as brand loyal as they once were.
"Retailers are very concerned that they don't want to give sticker shock to their shoppers," supermarket guru Phil Lempert added on "Varney & Co." "You're going to see less products on the shelves because of efficiency of operation, both from a brand standpoint and a retailer standpoint."
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Sources further explained to Hu how price negotiations are taking place "for nearly every product" in grocery stores and remained unsure if the conflict will jeopardize whether supermarkets carry brand favorites.