TescoGate will rock trust and confidence in all grocery multiples warn retail analysts

By Gemma McKenna

Published: 20 October, 2014

Leading City and retail analysts fear consumers will be "horrified" by the fall-out from the Tesco accounting scandal which could have a knock-on effect on consumer confidence of not only the UK's biggest supermarket but across all major grocery retailers.

Up to now how retailers and suppliers work together has remained very much behind closed doors. In particular, the widely accepted business practice of retailers asking for listing fees and supplier payments for promotions and certain in-store activities has gone on without any public knowledge or scrutiny.

But analysts now believe consumers will be shocked by the revelations that have emerged in the national media following the Tesco's accounting scandal that it expects suppliers to help pay towards its financial performance.

David Sables, chief executive of Sentinel Management Consultants, negotiations experts, said the scandal could ultimately knock consumer trust in all major grocers, not just Tesco. He told Harpers.co.uk: "A lot of people in the general public didn't even realise that a third of the monies made by a supermarkets come through something other than buying and selling. People are horrified."

Leading City retail analyst, Mike Dennis of Cantor Fitzgerald agreed and said the revelations about Tesco "could change people's behaviour in a way we have yet to understand".

But Andrew Marsden, a veteran of the supply trade who has held senior marketing roles in Britvic and Danone and now works as a retail and marketing consultant, did not think the Tesco scandal would have a long term effect on consumers.

He told Harpers.co.uk that the entire episode "will largely pass consumers by". "If it was going to destroy [consumer] trust, it would have done so by now," he added.

Dennis believed the scandal could have long-term benefits in the way the retail sector behaves and works with suppliers. "Ultimately there's the potential for a positive - their disclosures will be significantly better than they have been before."

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