Grocery suppliers have been urged to share problems they are experiencing with big UK retailer compliance with the Groceries Supply Code of Practice (GSCoP) in a confidential survey being run by the Groceries Code Adjudicator (GCA) Christine Tacon, which is open until 22 April 2018.

The survey coincides with an investigation just initiated by Tacon into the Co-op. This relates to complaints of the Co-op unreasonably delisting suppliers, imposing charges for depot rejections and benchmarking of suppliers’ products.

The new investigation into the Co-op, which began earlier this month (March 2018), follows an investigation into Tesco in 2015. The Tesco investigation identified breaches of the GSCoP related to late payments to suppliers. Following this investigation there had been “significant changes within the industry”, Tacon reported.

Tacon, who since 2013 has been is responsible for enforcing the GSCoP, was speaking at an evening meeting on 21 March of the Chartered Institute of Marketing Food, Drink and Agriculture group held at the offices of Mintel in London. The GSCoP became law in 2010 and covers direct supplies from around the world to the 10 biggest UK retailers with turnovers of more than £1bn a year.

Co-op investigation
“With the Co-op, I am investigating whether they have delisted people without giving reasonable notice,” said Tacon. “The other area is I was told they introduced quality charges for cases rejected in the depot … they did this without telling anybody they were going to do this. The other one was benchmarking charges, where they were charging for benchmarking your products against other people.”

When asked what constituted reasonable notice, she said it needed to take account of considerations such as the length of time a company had been supplying a retailer; the percentage of its business conducted with it; its lead times for raw ingredients and packaging; and how far these were geographically sourced from, she added.

The results of this year’s annual survey will be announced at the GCA 2018 conference, which takes place at Church House in Westminster, London on 25 June. It will report on the latest retailer league table for GSCoP compliance. Past league tables have shown Aldi to be the most compliant retailer for the four years since the survey began. Last year, Iceland came bottom of the league, while Tesco was the most improved and Morrisons was the second most improved, Tacon revealed.

“Iceland aren’t actually breaching the Code … the sorts of things people say to me is that ‘they are not breaching the code, but they keep me in a constant state of jeopardy. Every time they don’t get their own way, they threaten to delist me’,” she added. “It’s not about breaking the code, it’s about the overall way they are being treated.” Tacon reported that this was probably because Iceland was being too aggressive with its suppliers, but was “desperate to do something about this”.

Delayed payments
The top problems reported to the GCA were delayed payments by retailers to their suppliers, sometimes related to disagreements on ‘drop and drive’ deliveries, followed by problems around forecasting and promotions, she said.

However, a constant obstacle Tacon encountered was the reluctance of suppliers to report problems. “Suppliers have actually been very unhelpful, really, when you consider that I was set up to protect suppliers,” she commented. “Very few of them will actually come and see me.”

The reason is that many fear being identified and subsequent retribution from their retail customers – despite Tacon’s repeated protestations about protecting the anonymity of suppliers. She hoped more suppliers would be reassured to participate in this year’s survey. Last year she received 1,400 responses.

Nine out of 10 retailers affected opposed the GSCoP when it was first proposed, said Tacon. But most now recognise its introduction had helped expose inefficiencies in their supply chains, she added: “Everyone benefits from it.”

She went on to explain that her role was solely to enforce compliance with the code and didn’t cover product pricing. However, it did cover unfair promotional practices and – a subject of widespread concern – retrospective charging for other issues, she added. “The main thing I have been trying to get from the retailers is a culture change,” she said. This was achieved through a “collaborative approach” with retailers, involving quarterly meetings with all compliance officers, plus meetings with chief executives and chairs of their audit committees.

GSCoP training is crucial
Tacon strongly urged suppliers to become better trained in the GSCoP. This would help them in their dealings with supermarkets, since they would then be more aware of code transgressions, she claimed.

“My basic message to everybody is don’t even dream of walking into negotiating with some of the best negotiators in the world with our 10 major retailers without knowing the code and what your rights are, because they will try and put their toe over the line,” Tacon warned. “And if you can stamp your foot on their toe the minute they do it, it’s a much easier debate than if you have taken it back and consult a lawyer and the lawyer says they can’t actually do that.”

However, when outlining the remit of the GCA, she stressed: “When I find out what the big things are, I work on them … I am not a complaints handling body. I just look for patterns of behaviour then take them up and do something about it.”

Since the GCA’s annual survey was introduced in in 2014, reported breaches to the GSCoP had decreased from eight out of 10 to just over five out of 10 last year. This demonstrated The GCA’s effectiveness, she argued.

Some complaints had been regularly aired by suppliers over the years. These ranged from accusations of “forensic auditing” by retailers; being unfairly charged for consumer complaints; and margin maintenance payments – all involving retrospective claims for compensation from suppliers.

Another area identified related to lack of choice when it came to selecting packaging suppliers – a problem now largely eliminated, said Tacon. However, she reported that many suppliers still complained that retailer charges for artwork and design were “extortionate”. That said, “it’s only a breach of the code if the retailer is getting a kick-back”, she added.