Supermarkets 'will struggle' to meet new suppliers code

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.

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