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Suppliers Vs Retailers Price Rises Becomes A Major Issue

Suppliers to retailers in the CE and appliance channel are facing new pressures with several brands telling ChannelNews that retailers have been reluctant to accept price rises.

A senior director of a major Korean brand said “We carried price increases prior to December 2021 but we now need to lift prices significantly which is a problem for some retailers who are resisting increases which is some cases could see increases of over 20%.

The issue of price rises is not just in the CE and appliance markets.

Coles chief executive Steven Cain recently confirmed that suppliers are petitioning for price rises five times the prices of 2021.

Credit: LG

This coupled with labour shortages which the likes of JB Hi Fi, Harvey Norman is also facing is creating a new level of pressure for retailers.

The boss of the country’s second biggest supermarket chain also said Australia was facing a labour crisis as staff rosters were hollowed out by a potent combination of Covid-19 and the flu, with Coles’ absenteeism rates twice the normal rate.

Cain said earlier this week “We do have a labour crisis in Australia, across many, many sectors. It has been compounded by what is going on with Covid and the flu, our absenteeism today is twice normal with Covid, flu and the churn rate in most industries is increasing,” he said.

“I was talking to one of our store managers last week and asked him what the greatest challenge was.

“He said it was definitely trying to find the right people with the right skills, and he’s lost one on the shop floor who is going to be an $80,000 a year dishwasher.”

Executives at Big W the Woolworths owned discount store told ChannelNews that the upward pressure on prices was starting to have an impact with consumers already moving to “value “brands.

Distributors such as Tempo and Laser Corporation who have a reputation for supplying value brands believe that they are well positioned as consumer move away from “known big brands “to value brands in an effort to spend less while still getting what they want.

Mr Cain said a number of factors outside of labour costs and higher wages was driving up prices.

He accused suppliers of sticking their hand out more than ever before to discuss pricing issues with some price rises in double digits which analysts claim will lead to a spike in inflation if passed on.

One brand recently pulled their stock out of a major retailer who refused to accept the demanded price rises.

In the CE channel brands such as Dyson, Sony, Samsung along with several accessory suppliers are building out their direct sell operations.

Cain said that “The prices we are seeing now are being driven by things that are not particularly linked to labour costs … the labour cost increases at the end flow through the system obviously, so that is something that will come over the next 12 months.

“But as I sit here today, we have five times as many requests for price increases as we had last year. Five times,” Mr Cain said.

Woolworths boss Brad Banducci warned his supermarkets had already witnessed price lifts and that inflation was a “live and real” issue.

He said some of the biggest grocery suppliers that fill his aisles were preparing to knock on his door for a second round of price increases.

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