The second grocery code adjudicator conference was a sold out event, with not a spare seat in the room as Christine Tacon began her presentation on the promotion of good practice over the last year.
She was quick to remind the room that her role is not about the imposition of the code: it is about behaviour change and the development of a more equitable relationship between retailers and suppliers. With the much publicised launch in February of the investigation into Tesco and two ongoing arbitrations she has also been able reach an agreement with retailers on forensic auditing – they have all now made a commitment to look at the season in hand and two previous ones and no further. There is clearly much greater awareness of the code, how to interpret it and the correct way to go about addressing concerns with retailer teams.
The other of the two top issues from the first year has also now been addressed and closed. There were concerns raised by suppliers that some retailers were perhaps viewing the payment of compensation for customers complaints as a profit centre. Charges ranged from £0 to £45 per complaint: in some retailers up to 97% of complaints were resolved in store which is clearly cheaper.
Ms Tacon’s team and the retailer code compliance officers have conducted a full analysis of the way that retailers handle and charge for consumer complaints. There has been a best practice model shared for future complaint handling. The key elements are that retailers should:
• ensure that suppliers understand the basis of any consumer complaint charges applied;
• provide information to suppliers about what was wrong with the product within five days to allow the suppliers to take swift action; and
• aim to resolve more complaints in-store to keep costs down.
There was a warning from Ms Tacon to retailers however. “If I receive further evidence on these issues it may lead to an investigation,” she said.
Forecasting and service levels seem to be next under analysis – there is a long standing supplier view of the inaccuracies in retailer forecasting. We have all heard of instances where orders vary significantly from forecast with the financial penalties that sometimes follow after. Several suppliers have been to the groceries code adjudicator (GCA) with their view that they bear all the risk from poor forecasts. The forecast over rider has now been removed from email signatures and work is beginning on looking at compensation for forecasting issues.
Stephan Shakespeare presented the findings of the YouGov survey carried out on behalf of the GCA which showed a drop in the number of suppliers reporting groceries code related issues in their dealings with the ten large retailers in the last 12 months from 70% in 2015 compared to 79% in 2014. A larger proportion of suppliers now would consider raising issues with the GCA – up nine points to 47%. But they still cited concerns about retribution as the dominant reason for holding back.
I was really concerned about how few suppliers appear to be getting training in the code – all of the retailer staff are which surely leaves a vast difference in interpretation and ability to manage negotiations.
“In my meetings with suppliers over the year it has become increasingly clear that there has to be a major push to get them to do more about being trained in the code,” Ms Tacon said. “Far too many are still coming to hear me present to learn for the first time about a law that is there to protect them and has been in existence for over five years.
“Retailer buyers are well trained in the code, so for a supplier to challenge a request or requirement as non code compliant, they need to know their rights. In this coming year I will be encouraging all the relevant trade associations to play a stronger leadership role in relation to the code by offering training for their members.”
This was one of the closing statements in the adjudicator’s report. All the trade associations can help with training. Have your marketing representatives spoken with the British Brands group, the NFU or Sentinel about getting trained in the code? Surely before we know it the retailers will be the savvy ones about the code, leaving the suppliers in an ignorant position.
This article has been co-written with Natalia Oosman from Cranbrook Grammar School