Feedback from Groceries Code Adjudicator’s (GCA) 2022 sector survey suggests that surging inflation has weakened the relationship between the UK’s designated retailers and their suppliers.
Findings from the survey include a quarter (26%) of suppliers saying they had experienced a refusal by a retailer to consider a request for a cost price increase (CPI) or an unreasonable delay from the retailer in concluding the request. Overall, 80% of suppliers had asked for at least one CPI in the previous 12 months, and the GCA noted that no other issue, either Code-related or non-Code-related, had been raised by a higher proportion of suppliers in the last five years.
Meanwhile, after year-on-year improvements in retailer-supplier relationships up until 2021, the latest survey shows a fall in the number of suppliers not facing any Code-related issues from 56% last year to 47% in 2022.
The results suggest that following two years of the pandemic where retailers and suppliers worked closely together and improved their relationships, the pressure from rising prices has strained relationships, and Code-related issues between the two have also risen.
In response to the difficult conditions, retailer performance is mixed. Aldi returned to the top of the leader board with a score of 98%, whilst its key rival Lidl slipped to the bottom with 84%. In total, five retailers either improved or maintained their score despite sector challenges. However, the other eight retailers have seen falls (of up to 11%) in the way that their suppliers have scored them.
| 2022 Rank |
Retailer | 2022 Score (%) |
2021 Rank |
2021 Score (%) |
| 1 | Aldi | 98 | 3 | 97 |
| 2 | Tesco | 97 | 4 | 96 |
| 3 | M&S | 97 | 11 | 92 |
| 4 | B&M | 94 | 6 | 96 |
| 5 | Sainsbury’s | 94 | 1 | 98 |
| 6 | Co-op | 94 | 2 | 97 |
| 7 | Waitrose | 94 | 5 | 96 |
| 8 | Asda | 93 | 8 | 94 |
| 9 | Ocado | 91 | 12 | 90 |
| 10 | Home Bargains | 87 | 10 | 94 |
| 11 | Iceland | 86 | 13 | 86 |
| 12 | Morrisons | 86 | 9 | 94 |
| 13 | Lidl | 84 | 7 | 95 |
The retailers are ranked by their overall compliance with the Code. The percentage comprises those who rated that the retailer “consistently well” or “mostly” follows the Code.
“Inflation has affected the entire groceries sector as witnessed by the sheer scale of requests from suppliers to increase prices,” said Mark White, the Groceries Code Adjudicator.
“I am concerned that the pressure has impaired relationships and created wider problems. My priority is to work with all the retailers to ensure they treat their suppliers fairly as they navigate the cost price process during this difficult time.
“It is also important that suppliers confidentially report any issues they have so I can take them up swiftly with the retailers.”
The GCA noted that the groceries sector, along with the wider economy, is suffering from a perfect storm of supply chain shortages, and higher energy, raw material/ingredient, and packaging costs. This significant inflation is affecting suppliers of all types of grocery products.
De-listing following an unsuccessful CPI negotiation was another key issue raised, with 16% of suppliers complaining of being de-listed without reasonable notice (compared with 12% in 2021). There was also a 3% rise in retailers not meeting their duties in relation to de-listing (from 6% to 9%).
Other issues raised by suppliers included delays in payments – 12% of suppliers faced delays in or not receiving payment when there were disagreements about deliveries (up from 8% in 2021).
Meanwhile, 18% of suppliers highlighted that processes and procedures in place to enable invoice discrepancies to be resolved promptly were inadequate (up from 14% in 2021). And 18% of suppliers said they had been affected by incurring significant costs because of inaccurate forecasting by retailers (up from 16% in 2021).
Commenting on Aldi topping the compliance ranking, the discounter’s Chief Executive Giles Hurley said: “We are incredibly proud of this achievement as the Code reflects retailers’ relationships with suppliers, and importantly helps to ensure that they are being treated fairly. Many of our suppliers have partnered with us since we entered the UK market over thirty years ago. We fundamentally believe that these relationships should be based on fairness, trust and longevity providing certainty and security. This has helped Aldi to deliver to customers our commitment to provide unbeatable value.
“Our business model is based on efficiency and simplicity. Through our streamlined product range with a focus on exclusive own label brands, as well as running an efficient operation, we can deliver the lowest prices without compromising on the price we pay our suppliers. This has been the foundation of our success in transforming the grocery sector. We are committed to building long term relationships with suppliers and paying them a fair price whilst helping customers with the cost of their food shop.”
Download the full GCA Annual Survey 2022 Results
NAM Implications:
- Given unprecedented market pressures…
- …it can be tempting for suppliers to ‘keep head down and look busy’
- But without facts, Mark White cannot act fast…
- Therefore key that “suppliers confidentially report any issues they have so I can take them up swiftly with the retailers.”
