GCA Hails Significant Progress For Suppliers

The UK’s top ten supermarkets have all acted on issues raised by the Groceries Code Adjudicator (GCA) Christine Tacon and suppliers are seeing the benefit.

Speaking at the GCA’s third annual conference in London yesterday, Tacon said that she was achieving significant progress as a sector-wide survey showed a further fall in the number of suppliers experiencing Groceries Code-related issues.

According to the YouGov survey carried out on behalf of the GCA 62% of direct suppliers said they had experienced an issue in the past year – compared to 70% in 2015 and 79% in 2014.

Suppliers rated Aldi, Sainsbury’s and Lidl as the top three supermarkets in terms of complying ‘consistently well’ and ‘mostly’ with the Code during the previous 12 months. Morrisons was the worst at complying with the code, followed by Iceland and Asda.

Direct suppliers also told YouGov that most retailers have improved their behaviour in the past year with the highest performer identified as Tesco – 65% of those supplying the retailer saying its practices had improved and only 5% reporting they had worsened.

Tacon said the results demonstrated that the sector was seeing the benefits of the GCA’s work. “All the regulated retailers have acted on the issues I have raised over the past year and there have been some excellent examples of changes in retailer practice,” she said.

“I am delighted that direct suppliers are seeing the impact of real change for their businesses. For the second year running the number of suppliers reporting Code-related issues has fallen.”

The YouGov survey identified the top issues experienced by suppliers: incorrect deductions from invoices with or without notice topped the list on 30% followed by excessive retailer charges for artwork/design (28%) and no compensation/incurring penalty charges for inaccurate forecasting (22%).

Tacon has used the survey findings and other information received as well as her learnings from the Tesco investigation to develop a new list of Top 5 issues that will be the focus of her work in the coming year – namely charges for artwork and design services, delay in payments, margin maintenance, pay to stay arrangements and payments for better positioning.

In a presentation to the conference she announced the launch of a formal consultation into payments for better positioning of goods – one of the five issues.

“During my investigation into Tesco I found areas of concern about the issue of payments for better positioning or increased share of shelf space,” she said.

“I came across instances where a Tesco request for investment resulted in the supplier asking for share of shelf space commitments, product placement near competitors and exclusivity.

“I also saw examples of significant payments for category captaincy and range reviews where suppliers felt that if they didn’t pay they would be adversely affected in terms of positioning on shelf.

“Such arrangements appear to have the potential to have an adverse effect on competition through retailer acceptance of large sums of money from suppliers in exchange for better positioning or increased shelf space.”

The consultation is open for 12 weeks until 19 September and the responses will help the Adjudicator clarify how paragraph 12 of the Code relating to payments for better positioning should be interpreted.

Other topics covered by the survey:

  • A rise in the number of direct suppliers undertaking training in the Code (29% to 35%) – following a GCA campaign urging suppliers to ‘get trained’;
  • A strong preference among suppliers for online training tutorials; *Increases in supplier knowledge across all retailers about where to find the Code Compliance Officers;
  • A fall in the number of direct suppliers saying they have raised an issue with a retailer in the past 12 months (17% to 13%);
  • Jump in both good understanding of the Code and good understanding of the GCA’s role and responsibilities (up 7%).

One area of disappointment highlighted by Tacon was no change in the proportion of suppliers prepared to bring information to the GCA.

She said: “I am disappointed that the number of suppliers saying they would bring an issue to me remains stubbornly on 47% – with more than half giving the reason as fear of their relations with a retailer being damaged.

“This is despite the publicity around the Tesco investigation and a clear demonstration that I can carry out a complex investigation with significant findings and benefits for suppliers with no identities revealed.

“In the coming year I will be redoubling my efforts to overcome this fear factor and also to reach suppliers overseas where knowledge of the GCA remains low.”

NAM Implications:
  • Real progress being made, but nothing beats a personal study of the report (see the GCA site)
    • Further moves depend on supplier willingness to come forward, with GCA taking all possible steps to preserve confidentiality
    Incidentally, given the excitement in nearby Parliament Square, the impact of Brexit on the GCA Conference was palpable, adding significantly to the takeaways for the 250+ delegates present…
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