Wednesday, February 9, 2011

Reckitt threatens to cut retailers' margin

Glass bottle of DettolImage via Wikipedia
Reckitt Benckiser, maker of Dettol antiseptic and Harpic toilet cleaner, plans to cut margins of modern retailers by 10-15% to partly offset rising input costs.

In an e-mail sent to retailers such as Reliance Fresh , Reliance Super, Aditya Birla Retail's More and Bharti Enterprises' Easy Day last Friday, Reckitt Benckiser said it had two options - to increase sticker prices or cut retailer margins - and the company is opting for the latter.

Interestingly, an industry official said, Reckitt has still not asked Future Group's Big Bazaar to take a margin cut. That maybe because the country's largest retailer's private brand, Clean Mate, outsells Harpic in Big Bazaar outlets. The official, speaking on condition of anonymity, however, said the two companies have a meeting scheduled for next week and that may be to negotiate margins.

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