Tesco’s new online fulfilment plan has led broker Shore Capital to question whether the move is worth the reputational damage it might cause.
Trade press sources reported over the weekend that Tesco is demanding a fee from suppliers for each item sold through its Tesco.com platform comprising 12p for a branded good item and 5p for an own brand product such as fruit.
The charge will apply to items sold through its £7bn grocery dot com and Booker businesses.
Shore Capital added that perhaps more worrying for suppliers is that according to the reports non-compliance might lead to the ‘threat of range reviews or reduced prices.’
“In truth the story is not helpful to Tesco’s immediate reputation, and we worry about GSCOP (Groceries Supply Code of Practice) involvement,” said the broker.
“Whether or not Tesco has taken the correct approach here though is subject to serious question; talking to suppliers is different from sending what could be construed as potentially menacing mail shots.”
Shore Capital, which has a buy rating on Tesco shares, doubts it will affect this year’s financial performance but “reputationally we see it as damaging and we would absolutely not be undertaking a supplier satisfaction survey.”
“Our [buy] stance is not, in truth, helped though by clear rancour with the supply chain.”
Shares were down 1.3% at 256.3p.