The start of the year can be a busy time for negotiating with retailers. Knowing your rights under the Groceries Code is essential for any supermarket supplier, as Jez Fredenburgh reports.
This time of year can see extra pressure applied to retailer suppliers.
Some retailers are starting their financial years and are busy looking to make new deals, while others are coming to the end of their financial years and may be looking to recover costs.
Ged Futter, a former senior buying manager at Asda who now trains suppliers on the Groceries Code and negotiating with supermarkets, said this made it an optimal time for supermarkets to apply pressure and push the boundaries of fair practice.
In addition, price competition remains as fierce as ever. Understanding the ins and outs of the The Groceries Supply Code of Practice (GSCoP) should help protect against this.
What is the GSCoP?
THE Groceries Supply Code of Practice (GSCoP) is a piece of UK legislation which sets out the principles of fair practice which groceries retailers must legally abide by when dealing with their direct suppliers.
This includes big and small suppliers and those who are outside of the UK. It does not matter whether you supply one line into one store, or if you are a global fast-moving consumer goods supplier, the legislation still applies, said Mr Futter.
The code currently covers Tesco, Sainsbury’s, Asda, Morrisons, Co-op, Waitrose, Aldi, Lidl, Iceland,Marks and Spencer, B&M, Ocado, plus wholly-owned subsidiaries of these retailers; Booker, NISA, Costcutter and the Safeway brand in McColls stores.
The job of the Groceries Code Adjudicator (GCA) is to ensure retailers abide by the legislation.
GSCoP and the GCA do not cover prices negotiated. Suppliers must agree prices with retailers, but if a retailer tries to change what has been agreed retrospectively, then that is a code breach. This includes lowering the overall price paid for a product by asking for retrospective payments.
KNOW YOUR RIGHTS
READ and understand the code and what it means on a practical level, advised Mr Futter. The GCA’s website hosts the legislation, as well as guidance on best practice.
Also, get trained up on the code.
All retailer buyers are retrained annually, so you are at a disadvantage if you do not understand GSCoP. There is a list on the GCA website of approved trainers (see ‘Top tips on using GSCoP’ box).
Be aware a buyer cannot just make a decision without any negotiation. It is your right to have this decision reviewed by the buying manager and code compliance officer (see ‘What to do if there is a code breach’).
Retailers must also give ‘reasonable notice’ to any significant changes, such as delisting a supplier or changing their order.
Many suppliers believe a reasonable notice period is 12 weeks, but this is a myth, according to Mr Futter.
GSCoP does not give a specific time, as what is ‘reasonable’ must reflect the situation, considering the time it would take to make changes, how long the supplier has been working with the retailer, whether they have already bought packaging, for example.
It is also vital to have a supplier agreement to ensure there is consistency from one buyer to the next, particularly as there will rarely be a handover between buyers.
Supermarkets are required to have supplier agreements, but Mr Futter said many do not.
The agreement should clearly include what has been agreed and what that business looked like, such as the lines of delivery, where they should be delivered to and what the cost prices are.
USING language associated with the code, such as ‘reasonable notice’, without actually uttering the word ‘GSCoP’, is a good way to maintain relationships and set boundaries, said Mr Futter.
Using code terminology shows you know what the legislation says and will be on the look-out for breaches.
“But make sure you understand the terms before using them,” he added.
MR Futter said: “The power rests with you, do not rely on the GCA. Before you get to the GCA you must have escalated [any issue] with the retailer first.”
Suppliers should first raise the issue direct with their buyer. If they do not resolve things, then go to the senior buyer, and after them the code compliance officer (CCO).
Every retailer is required to have a CCO to monitor the company’s compliance. This person sits outside the buying team, normally in the legal team. CCO contact details are listed on the GCA website.
“Saying something such as ‘I am not sure this is something I feel comfortable with’, is a good way to raise an issue,” suggested Mr Futter.
KEEPING a paper or electronic trail is essential for dealing with any code breaches later on.
“Some buyers think they can be clever and not write discussions down, or send messages via WhatsApp and they will not be covered – this is wrong,” said Mr Futter.
“All communication is covered [by GSCoP] and anything which is agreed verbally must be recorded in writing by the buyer within three days.
“After your meeting, follow it up with an email saying what was agreed. The retailer is obligated to do that, but they often do not.”
Even if the retailer does not reply, your email is still a confirmation. Communication Farmers were advised to keep a log book of every communication and have everything saved in one place.
Take screenshots of phone messages and save these on your computer.
MANY suppliers fear calling retailers out on code breaches. But setting boundaries and being firm and fair will command more respect and lead to better long-term outcomes.
Mr Futter said: “The most important thing is not to be dragged into the retailer’s short-term games. As a supplier, it is important to think about what is best for your business in the long-term.
“You have to have boundaries. If you allow the goalposts to keep being moved then the buyer will keep taking – they are trained to take.”
It is worth bearing in mind that buyers change often, so focus on your long-term relationship with the retailer rather than any individual buyer.
Weigh up when to use, and when not to use, the code, added Mr Futter. If you are charged £50 for a customer complaint which was not your fault (a code breach) then you might not want to risk the relationship.
But if it is a large amount of money, or if it happens regularly, then raise the issue.
RESOURCES AND CONTACTS
The GCA provides the full code, plus retailers’ code compliance officer contacts, complaints procedure details, clarifications and interpretations of the rules, plus a list of GSCoP training providers on its website, at gov.uk/government/organisations/groceries-code-adjudicator