Healthy soil and sustainable growing

["Tradingpost" <tradingpost@lobo.net>]

This is in England. Similar forces apply in all western nations.

paul tradingpost@lobo.net
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http://www.guardian.co.uk/business/2008/dec/14/retail-supermarkets-suppliers

-credit-crunch


Supermarkets' emergency plans to keep shelves full
• Retailers fear collapse of lines of supply
• Bailiffs prepare for busiest Christmas as shops go under

    * Zoe Wood, retail correspondent
    * The Observer, Sunday 14 December 2008
    * Article history

Fears that scores of supermarket suppliers will go bust next year have led
the country's major chains to draw up emergency plans to replace them, The
Observer can reveal.

Separately, on the high street, bailiffs are getting ready for their
busiest Christmas ever, with a slew of retailers expected to go into
administration.

Supermarket chain Asda, led by Andy Bond, is working on 'worst-case
scenarios' across the board - combing its supplier base and examining
alternatives to them. 'Suppliers are under a lot of pressure and there will
be casualties,' said a senior executive at another store chain, which has
already stepped in to pay troubled suppliers ahead of schedule. 'We need
each other, it is not a zero-sum game.'

The need for alternative supply lines has been brought into focus by the
collapse of Woolworths and its distribution arm, EUK, which supplied the
supermarkets as well as Zavvi, the former Virgin Megastores, with CDs.
However, cracks have been showing in other areas, with milk processor Dairy
Farmers of Britain in the midst of a restructuring that will see two
dairies close and up to 640 jobs lost.

The damage a collapsed supplier can do is laid bare at Zavvi, which has
been destabilised during the most important sales weeks of the year. It has
been forced to suspend its website with former parent Virgin stumping up a
£5m 'fighting fund' to keep shelves filled in the key trading days left
between now and Christmas. But with no obvious successor to step into the
void left by EUK, Zavvi faces a grim outlook in 2009.

Tesco said it was supporting suppliers that needed extra help by giving an
indication of future orders. 'The worst thing for a supermarket is for a
supplier to go under, because you are left with a big hole and investing in
a new one is a big deal,' said a Tesco spokesman.

Analysts say the supply of ready meals is vulnerable. Major players include
the heavily indebted Premier Foods and Icelandic group Bakkavor. The latter
has £140m trapped in collapsed Icelandic bank Kaupthing, although it says
its UK operation, which supplies all the major grocers, is not affected.

Relationships between supermarkets and suppliers are often tense at the
best of times. Suppliers hoping for additional protection from the powerful
supermarkets - who have been accused of making unreasonable demands in
price negotiations - look set to be disappointed as the Competition
Commission's plan to create an ombudsman looks doomed. Asda will not sign
up to the scheme, so the matter looks set for referral to the government's
business department in the new year.

The collapse of Woolworths has come to symbolise the dire state of the high
street, where retailers are facing the worst trading conditions in a
generation. And with a spate of administrations expected early in the new
year, bailiffs are gearing up for a festive feeding frenzy around 'quarter
day' - when even struggling retailers must find three months' rent - which
falls on Christmas Day.

'We have had more instructions than ever before and I've been in this
career for 21 years,' said Jon Dawkins, chief executive of bailiffs' firm
Dawkins, whose clients include the Crown Estate, Transport for London,
asset managers Prudential and Threadneedle, as well as all the major
property agents.

Landlords want to get their cash while retailers still have money in the
tills after the Christmas rush - and before administrators are called in
and cash is ringfenced for secured creditors.