Welcome by the food legislator
I have just held my first annual conference and while I was disappointed that it had to be held virtually, I am glad that so many were able to attend. Attendees heard from Small Business Minister Paul Scully and Chief Executive of the Food and Drink Federation, Ian Wright, among others. The conference was also an opportunity to share the findings from the YouGov deep dive interviews with suppliers that were conducted in the summer. The views expressed in these interviews and my recent discussions with suppliers will help shape my activities over the coming months, and I set out my priorities in a presentation at the conference. You can watch this presentation on the GCA YouTube channel.
Best practice statement on audits
I have recently heard concerns about retrospective audit reviews, particularly those related to promotional activities. Issues such as an apparent lack of data or the cherry-picking of data, the time it takes to settle matters, and in some cases trying to link problem resolution to current and future trading have been raised with me. I am concerned that such audits can hit smaller suppliers disproportionately.
In a previous newsletter, I reported that with the addition of Sainsbury’s from March 2022, all 13 Designated Retailers (Retailers) will sign the commitment limiting the time each party will reopen audit claims for the current year and the two previous years can be fiscal years. But I went further and developed a best practice statement on audits that has now been posted on my website. By agreeing to this statement of best practice, all 13 retailers have committed to conducting audits in a transparent manner to reduce the number of invalid claims.
The declaration is intended to promote better working practices among retailers in terms of continuous improvement. To this end, retailers should carefully review complaints before filing them, provide the data and documents to support a complaint with suppliers, and complaints should be resolved within a reasonable time frame. The settlement of claims may not be combined with current or future commercial transactions. When retailers use third parties to raise and prosecute claims on their behalf, suppliers should be aware of this from the start, and retailers should review how they are working with third parties to ensure compliance with the Code. I will continue to discuss audits with retailers and would like to hear from suppliers who continue to have concerns on this issue.
As retailers are reviewing their ranges due to the effects of Covid-19 and the change in buyer behavior in general, I am getting a lot of inquiries about the delisting process. I asked retailers about their delisting policies and highlighted issues (in very general terms) that were raised with me. I have tried to ensure that retailers’ buyers actively engage in a dialogue about delisting decisions so that suppliers really understand the commercial reasons they are given for their decisions.
I have also monitored the retailers to ensure delisting decisions are properly governed, for example to eliminate the use of 12 weeks as a fixed delisting period. If suppliers are given fixed delisting periods, I want to know about it. The concept of reasonable time that retailers must communicate to suppliers whose products are being removed from the list is not amenable to any arithmetic or artificial formula. If I need to determine whether a supplier has been given a reasonable period of time, I will consider all circumstances and I am not restricted in making this assessment. Every facet of the relationship – including length and depth – will be an important consideration.
Supplier’s Concerns About Inexperienced Buyers
A strong feeling in the YouGov interviews was the emergence of what some suppliers refer to as the “new generation of buyers” with little experience in dealing with suppliers, many of whom have worked with retailers over a long period of time. One telling comment was that many of these buyers “have a spreadsheet approach to relationships.” Suppliers are concerned about the lack of knowledge of the Code among these new buyers. But there also seems to be a lack of knowledge of the category they work in as suppliers spend a lot of time and effort training the buyer, only to see the buyer category change just as the knowledge base has grown is. I urge retailers to not only train their buyers on the requirements of the Code, but also how to build wider relationships and really understand what they are asking of suppliers. This should help change the perception that buyers are vending machines controlled by distant senior managers. Responding to these concerns is one of my priorities to drive an enterprise-wide approach to code compliance. I have already discussed this priority with retail management and will now expand on those earlier discussions. From my point of view, the tone from above is crucial and I will watch this carefully as many of the suppliers who spoke to YouGov believed that the buyers they found challenging were merely passing on messages from the top of the company.
I am sending a clear message to retailers that they need to maintain and improve the progress made in recent years in building constructive relationships with suppliers. This advance has benefited all parts of the sector and has made a real difference for consumers. It has proven itself in challenging times. The industry is obviously facing new challenges and we still don’t know if we have finally made it through the Covid forest. Constructive relationships have to be for yesterday, today … and for tomorrow.
Mark in white
Meet the CCOs
Mark White has invited retailers’ code compliance officers to make new videos introducing themselves and explaining how they work with suppliers, including their obligations to maintain confidentiality. A preview of the videos was shown at the annual conference and the full videos will be uploaded to GCA’s YouTube channel.
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