Saturday 19 January 2013

Low cost vs ethical pricing

Much of this week’s media, that I paid attention to anyway, shone the spot light on our own personal buying strategies for food:
When I shared my admiration for the British family in my blog and encouraged readers to shop local more often than just Christmas and when it snows, I was met with responses about the high cost of doing this.

I wondered about the difference between personal shopping and professional buying. I found it interesting that personally I’m hearing we’re after the lowest cost when within business we’re often berated for doing just that.

As purchasers in organisations our internal stakeholders often accuse us of only concentrating on getting the lowest cost and of not considering:
  • what they really want
  • the quality
  • the service we get
  • the additional costs for extras
  • whole life costs
  • long term sustainability
  • and so on.
I’m surprised therefore that all these considerations are seemingly no longer relevant when buying food for ourselves. After all it’s the food that has the capacity to keep us all fit and healthy. With the wrong food having the potential to cause as much havoc personally as extra horse in their burger did for the share price and public perception of Tesco yesterday.

I wonder how much our low cost strategy is driving the likes of Tesco to ignore the list above and drive their suppliers for lower and lower prices.

Personally, since shopping more locally, I know I’ve got better value and my over all shopping bill is cheaper. Yes the mushrooms might be a few pence more expensive but:
  • I only buy what I want and make my own (and don’t get enticed to buy those processed foods or bags of lettuce that will go off before I’ve eaten it all)
  • I get to choose the quality of all the ingredients that go into what I eat (thus avoiding horse in my burgers unless I want it there)
  • I get advice on how to cook certain ingredients or get the recipe for the soup
  • I don’t buy all those extras that so often find their way into my trolley
  • I don’t have the 40 mins round trip to drive to the supermarket
  • I have more billable days available to earn an income due to improved health
  • And I have a shop still open, because I frequent it the rest of the year, that I can pop into when it snows.
Having said that - you will still see me in the supermarket – this week’s discussions have simply made me question how often that should be. After all if I’ll say no to work because I don’t agree to the values of an organisation why do I seemingly ignore these same ‘ethics’ when buying my food or other household items! Crikey not buying from Amazon would be very very hard but should I do so and endorse their business practices just because it’s easier!

What’s your buying strategy for food? And would it stand up to the scrutiny of internal stakeholders in the business in which you work?

Alison Smith
The purchasing Coach
Inspiring change inside and out

Trolley picture source: via Alison on Pinterest


  1. I recently attended a seminar run by Falkirk Council where one of the speakers outlined his experience of selling Steak Pies through the major supermarkets. Pressed time after time to reduce his price point, on arrival at one of these negotiation meetings he placed some Puff Pastry and a Stock Cube on the table. His illustration of the eventual end point of this downwards pressure on price led to a more sensible strategy. Presenting the item on the basis of its quality (and value for money) rather than the cheapest pie available has worked well for both parties through increased sales.

  2. I love the example thanks for sharing - I know it's the other side of the table from the one I normally sit but a great example of how more traditionally buying strategies of "lower, lower" are still in operation. Its certainly time for buyers to start understanding the costs, and analysing them so they understand the implications of what they're asking for.

  3. I saw this woman on BBC Breakfast this morning - supposedly her role is to ensure that contracts are honoured but specifically said that bidding for contracts was not covered - that was "fair competition" to ensure lowest prices for consumers

  4. Thanks Cat - I was just in the process of writing a blog on saying no and so it provided a perfect link to something very current.