The Groceries Code Adjudicator (GCA) has called on retailers to continue treating suppliers fairly amid the surge in requests for inflation-linked cost price increases (CPIs).
In his latest quarterly newsletter, Mark White highlighted that the outcome of such requests is a commercial matter for retailers and suppliers, and not a Code issue. However, with rising inflation across the sector, he said: “I am conscious of the pressure that the scale of CPI requests creates for both suppliers and retailers, and of the need for a redoubled focus on maintaining and building strong relationships.”
White revealed that he had observed some differences between a “good, fair CPI process”, and one that could “undo the work that has been hard-won during the pandemic to build relationships”.
He has published a set of seven ‘golden rules’ that are based on examples where retailers have dealt with CPI requests well. There are:
- Clear communication from the outset by retailers about the process and how long it will take.
- Awareness, and prioritisation, of the possible greater impact on smaller suppliers.
- Support for buyers from colleagues who have experience of dealing with CPI requests.
- Only asking for the specific information from suppliers that is needed to make a CPI decision.
- Clear communication of the outcome, so there can be no grey areas.
- No automatic delists or fixed delist notice periods following CPI negotiations.
- Reminding buyers about abiding by competition law e.g. never asking suppliers about other retailers’ plans or retail prices.
White concluded that he hoped to receive more information about the issue from the 2022 GCA survey, which opened last week and provides an opportunity for suppliers to tell the Adjudicator in confidence about any Code issues they are facing.
However, White urged suppliers who have concerns about the way their requests are currently being handled to contact him. “I would be particularly interested in hearing about any examples of unfounded claims that the Code requires suppliers to give fixed notice of any CPI,” he said.
Earlier this month, it was revealed that the GCA was looking into tactics being deployed by supermarkets to fend off inflation-linked price rise requests from suppliers.
NAM Implications:
- Ignore at your peril…
- Keep the GCA informed of any apparent breaches…
- …for the good of your supplier-retailer relationship.
