Distributors Business Association chairman Lasha Rizhamadze says that the vast majority of retail discount campaigns seen on supermarket shelves are financed not by retail chains, but by suppliers themselves.
Speaking on the TV-program “Analytics,” he stated that around 90% of all promotional discounts (“campaigns”) are funded by distribution companies and local manufacturers, placing the financial burden primarily on suppliers rather than retailers.
“Generally, any discount the consumer sees on the shelf is already 90% financed. The full financial burden falls on distribution companies and local producers. How is this structured? These discounts are directly agreed through contracts with retail chains, and they are also linked to various additional fees imposed by retailers, which ultimately determine how these campaigns are executed.
Today, this burden is clearly on distributors and producers. Most companies operate with already ‘strained pricing,’ meaning their supply prices are maximally optimized. In such conditions, absorbing additional costs becomes very difficult,” Rizhamadze said.
He added that while participation in discount campaigns is positive for consumers, it is essential to address the imbalance of power between retailers and suppliers. According to him, retailers impose financial and contractual pressures on distributors, which limits fair market conditions.
Rizhamadze argued that the implementation of EU directives is necessary to regulate payment terms and improve transparency in retailer-supplier relations. “We expect greater focus on payment deadlines and other mechanisms included in EU practice, which aim to protect suppliers’ interests and balance relations in the supply chain,” he said.
His remarks come as the Retail Association recently announced the launch of a “Family Basket” initiative, under which member companies will offer permanently discounted prices on selected essential products. The decision follows discussions on a parliamentary commission report examining pricing structures in food, pharmaceuticals, and fuel sectors.
