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Unilever and L'Oreal battle with retailers as crisis bites

By Katie Bird , 11-Feb-2009
Last updated on 11-Feb-2009 at 13:46 GMT2009-02-11T13:46:14Z

Relations between retailers and suppliers are growing increasingly tense as the financial crisis takes its toll on both parties.

Two of the largest players in the industry, L’Oreal and Unilever, are experiencing difficulties with their retailers, according to press reports.

Unilever faces the removal of a number of its products from Belgian supermarket chain Delhaize due to ‘unacceptable demands’ it has placed on the retailer, reported the Financial Times.

Leading brands Dove and Axe will be among those affected as the supermarket chain suspends purchases from the company.

According to the Delhaize, Unilever is demanding it carry the full range of Unilever products, rather than select those it wishes to offer to its customers.

At a time when consumers are looking to cheaper products, the Anglo-Dutch company is concerned about losing out to private label brands.

Unilever blamed the economic situation for the move although it stressed that other Belgian chains had accepted its conditions.

L’Oreal struggles with Russian retailer

France-based cosmetics giant L’Oreal is facing similar tensions with one of its major Russian suppliers – this time because retailer L’Etoile can’t pay, reported Reuters news agency.

The retailer has been trying to negotiate new terms and credit from L’Oreal as well as a number of other major suppliers, including LVMH and P&G.

Russia has been seen as one of the major growth markets for the industry and a weakness within the region could deal quite a blow to the global players.

“Today, many Russian retailers are suffering from liquidity problems, and this of course could impact on our sales,” said L’Oreal General Secretary in Russia Georges Chichmanov, as quoted by Reuters.

L’Oreal has yet to report its full annual results (set to be released the 16 February) but its nine month sales highlighted Russia and Eastern Europe as a strong growth market. The company referred to ‘very rapid expansion’ in Russia and high growth rates in Poland, Ukraine, Romania, Slovenia and Croatia.

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