The supermarket squeeze


I met a supplier to a national supermarket chain last week and, the next day, an employee of the same chain. Both told the same story but from different perspectives. The supplier is under constant pressure on price and terms – so much so that the supermarket chain is barely break even. He needs them to maintain production volume and therefore reasonable costs to enable margin from his small business customers. The employee is under constant pressure on hours. He is paid for 40 hours and is expected to work an extra 5 or 10 every week without pay. The threat is that it is only this extra work which is noticed at review time.

If I look at the prices charged by this chain for, say, produce, I can get the same quality at the same price at the local greengrocer where the employees seem happier and I bet they are not ‘forced’ to work the extra hours without pay.

Neither the employee nor the supplier can afford to get the major supermarket offside so they put up with unreasonable conditions and they allow themselves to be part of the working poor. They sacrifice for the share price of the company. While they are not happy, they are not prepared to say anything which puts their position at risk as the threat of loss of employment or supply contract is well understood.

Of course, the supermarket would deny that this goes on. Consumers would probably not believe it because of the nice TV commercials showing happy employees. The reality is that it does go on. Suppliers are getting screwed as are many employees. They cannot risk losing their jobs and contracts so they put up with it.

This is not socially responsible behavior by the supermarket chain. But they can assuage their guilt by making a donation to a charity or two and winning kudos in the press for their good works.

About the author


I own a software company and a newsagency in Victoria, Australia. You can reach me on +61 418 321 338 or mark[at]

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By Mark