In the never-ending quest to undercut competitors, supermarkets
are notoriously ruthless in their treatment of suppliers: stories
of exclusivity deals with alarmingly variable terms, companies
forcing their suppliers to buy back unsold produce and 90-plus day
payment terms are not uncommon.
So it's alarming today's Telegraph
carries a warning 'second-tier' supermarkets such as
Iceland, Waitrose and Marks & Spencer have underestimated the
measures they will need to take to comply with a new code of
practice which forces supermarkets to be more scrupulous with
suppliers.
The Grocery Supply Code of Practice (GSCOP) is due to replace
the more lenient Supermarkets Code of Practice at the beginning of
February, banning practices such as retrospectively altering supply
terms or asking suppliers to fund promotions, and extending the
rules to cover chains beyond the 'big four'.
But the newspaper says some retailers have a 'mountain to climb'
if they are to meet the deadline: 'industry insiders' told a
reporter some of the chains have 'vastly underestimated how much
work needs to be done'.
These doubts aren't new: as far back as July, the Association of
Convenience Stores (ACS)
voiced concerns the code wasn't stringent enough when it was
revealed its terms weren't compulsory. "Having found that a code is
necessary, the [Competition] Commission is proposing a code without
teeth," complained the organisation's chief executive, James
Lowman.
And back in April when Smarta interviewed
Lib Dem shadow chancellor Vince Cable, he emphasised the
importance of introducing compulsory terms for large retailers.
"Some of the really big commercial operations like Tesco are
behaving outrageously," he told us. "There are penalties for late
payment under existing legislation, but actually getting those
enforced is difficult."
Hit by late payment, a drop in lending and even less realistic
payment terms from large customers, small suppliers have had a
particularly difficult recession. The Competition Commission needs
to flex its muscles on this matter so they can finally hear some
good news.