Wednesday, July 23, 2014

Target squeezes suppliers

Target Corp. is demanding a two per cent price cut from its suppliers.

That’s double the one per cent discount that Sobeys introduced after it bought the Safeway Canada chain in Western Canada.

Sobeys demands the discount and no price increases during 2014.

That prompted others, such as Loblaws and Metro, to quietly match the demand.

There are fears expressed by food processors that Target’s move to double the discount may prompt a similar demand from Wal-Mart.

Target says it will put the money into a Target Canada Business Development Fund which it will use to improve efficiencies for its Canadian business. It lost close to $1 billion in Canada last year.

The squeeze the giant retailers apply is likely to be passed down to the weakest links in the supply chain and in many cases, that will be farmers.