Supermarkets ‘committing multiple breaches of groceries code’

Retailers committed multiple breaches of the groceries code in 2014, according to a survey of supermarket suppliers.

Of 45 suppliers surveyed by the Groceries Code Adjudicator (GCA) in December, 39 claimed they had experienced issues dealing with their supermarket customer.

The GCA noted 11 types of code breaches it was aware of and asked suppliers if they had experienced these. Suppliers reported a total of 131 separate code breaches across these 11 areas.

Respondents to the survey supplied the top ten retailers operating in the UK that are covered by the GCA and the groceries supply code of practice.

About half of the suppliers thought retailer buying practices had stayed the same in the last six months of 2014, while 11 thought they had improved and five thought they had worsened.

Fear was still a big issue in coming forward and only 45 out of 128 suppliers surveyed gave responses. The GCA said the survey was small and the results could only be taken as indicative.

 Top three code breaches reported by suppliers

1. The most common breach reported by the survey was supermarkets incorrectly deducting money owed by them in invoices, including delayed payments. This was sometimes difficult to prove, said suppliers, and so it took a long time for retailers to refund them. Some said supermarkets had made deductions to payments because of customer complaints even when the product in question wasn’t theirs. 
2. Also the survey suggested the practice known as “forensic auditing” was common. This is where retailers trawled back through accounts and correspondence of six years or more to find reasons to charge suppliers. Some suppliers reported the “aggressive pursuit of payments by retailers”.
3. Another top issue reported by suppliers was supermarkets demanding lump sum payments beyond what had previously been agreed. Reasons supermarkets gave ranged from the need to make up their profit shortfall, pay for marketing support and stocking the supplier’s products in more stores.

Call to treat suppliers ‘like employees’

Tom Lander, NFU food chain adviser said: “Retailers should take a much more simplistic, fair and collaborative approach with their suppliers, treating them in many ways like employees. Retailers would not impose penalty charges for their employees, so it should not be any different for their suppliers. 

“The survey also highlights the fact that some suppliers feel the GCA needs to make some “big wins” for more suppliers to come through with complaints.

“However, for the GCA to obtain “big wins”, it needs suppliers to put their heads above the parapet to enable her to take action.”

Suppliers urged to come forward with evidence

Tesco is under investigation by the GCA for alleged grocery code breaches relating to its £260m profit over-estimate last year.

Christine Tacon, the incumbent GCA, said last week that investigation could extend to other retailers if sufficient evidence emerged.

“I would encourage suppliers, trade associations and anyone else who has evidence to send it to me by 3 April 2015,” said Ms Tacon.

Contact GCA 

Information about how to submit evidence to the GCA is on its website. 

If you have experienced issues supplying supermarkets, Farmers Weekly would like to hear from you. Contact business reporter Jez Fredenburgh on 0208 652 4920 or email jez.fredenburgh@rbi.co.uk.