October 13, 2016 by Never Mind the BE
In a way, it’s been the retail equivalent of Trump vs Clinton, hasn’t it? I’m talking of course about the all-too-brief (but quite enjoyable to watch!) battle between supermarket giant Tesco and manufacturer Unilever, summarised nicely by Marketing Week. It was “all about Brexit” if we are to believe some newspapers, or at least the resulting state of the Pound and its effect on prices.
As an outsider, I can see both sides of the argument here, really. Unilever see currency issues as increasing costs that needed to be past onto its customers. Tesco, on the other hand, see this as a threat to its margins and/or its price competitiveness. Unilever appeared to be spreading the costs across all of its brands, Tesco saw price hikes of 10% or so as unjustifiable on exchange rate grounds when many of the products were actually made in the UK. And so the circular arguments rumble on, if that’s not a mixed-metaphor.
The bit that interested me was the consumer response (or general lack of it). Prices going up, shelves stripped bare of much-loved Pot Noodles… It really ought to have created more of a stir than it did. Maybe the reason is the general lack of love for both players in this game of retail ping-pong? Big brand manufacturers are generally regarded with suspicion by the average consumer, whilst public distrust of massive supermarket chains has long been legendary. Who knows… would have been fascinating to see the battle go on a little bit longer, if only to see where and when consumers deprived of their soap powder eventually came down off the fence.
Like the Trump-Clinton debates, though, I guess we should try to declare a “winner” on the basis of no real evidence. If forced to make a choice, I’d probably give Tesco a point or two extra… Unilever does have a point when it claims that it doesn’t set retail prices, so supermarkets could choose to absorb the increases themselves if they so wished. At the end of the day, however, Tesco‘s claims that increasing prices because of the rising cost of imports for products that hadn’t been imported anyway was probably a tagline that would resonate a touch more with the consumer – reinforced by media coverage of empty shelves, of course, the emotional significance of which was a far better card to play than boring arguments about price economics! Did they really run out of all those products? I wonder…
Ah yes… and then there’s the media… Unilever is one of the world’s leading manufacturing companies in the FMCG sector, with countless major household brands in its arsenal. Bizarre then that TV news here has, by an large, chosen to dub the company merely as “the makers of Marmite” in almost every headline over the past 24 hours, a product which (to be fair) you either love or hate anyway. And yes – that really is a Marmite-themed wedding you see in the picture!