The Groceries Code Adjudicator, Mark White, has issued a warning to supermarkets regarding supplier treatment.
- Supermarkets are urged to address demands from buyers for suppliers to ‘pay to stay’ on shelves.
- The warning is largely seen as directed at Tesco, following their new supplier fulfilment fees.
- Tesco’s scheme was initially voluntary but has faced criticism regarding delisting threats.
- Industry experts suggest Tesco’s approach may lead to challenging discussions with suppliers.
The Groceries Code Adjudicator, Mark White, has communicated a strong message to the supermarket industry, urging retailers to reconsider the demands placed on suppliers, specifically concerning financial contributions for shelf space retention. This directive comes amidst concerns over retailers requesting suppliers to ‘pay to stay’ on shelves, a practice that is viewed as contravening the Groceries Supply Code of Practice (GSCOP).
This move is seen as a particular cautionary note to Tesco, which earlier implemented new supplier fulfilment fees aimed at leveraging payments for participation in its online and wholesale services. Initially introduced as a voluntary scheme, it held underlying implications of supplier delisting if they opted out, thus raising concerns over fairness and compliance with GSCOP directives.
In a statement to The Grocer, White articulated his determination to ensure the equitable treatment of suppliers across the 14 monitored retailers. “I am determined to ensure that all 14 retailers are treating suppliers fairly and lawfully. If I believe that a retailer may have required an action that it should not have, I will challenge them to provide evidence that this is not the case,” he asserted. His appeal underscores the necessity for retailers to substantiate their compliance with the code.
Ged Futter, founder of The Retail Mind, expressed that suppliers are resistant to Tesco’s current approach, which seemingly prioritises financial contributions over flexible investment options. Futter highlighted suppliers’ concerns that Tesco is increasingly demanding investments channelled directly into reducing case costs, as opposed to allowing for diversified investment strategies. Such rigidity is expected to provoke difficult negotiations as suppliers seek higher volumes in exchange for lower costs.
Further complicating Tesco’s situation, the retailer is also facing industrial action at one of its depots, as staff protest new contracts that do not include pay increases. This situation adds layers to Tesco’s operational challenges and its relationship with suppliers and employees alike.
The ongoing developments call for careful navigation by Tesco to maintain compliance and positive supplier relations.
