Christine Tacon: 'It's not about compliance. It is about a cultural change'

A year after she was formally sworn in as Groceries Code Adjudicator, Christine Tacon has pulled off her biggest coup to date. Eight of the 10 retailers covered by the code have agreed to slash the time they will backdate payment demands from six years to two - Sainsbury’s and Waitrose are the only two not to sign up.

It’s a remarkable achievement, and one Tacon believes will go a long way towards creating more equitable relationships between retailers and their suppliers.

Earlier this year, she highlighted the practice of “forensic auditing” - where retailers go back years to analyse accounts and records to search for money that might be owed to them by suppliers - as the most important issue facing suppliers.

“I have spoken to businesses who have said they nearly went under because of this - I’ve heard of seven-figure sums being demanded,” she says.

Limiting the practice is therefore a major step forward, and Tacon is particularly pleased she has managed to make substantive progress on the issue without having to resort to heavy-handed tactics.

“I think this will be a really good indicator that we can change things without it being antagonistic,” she says. “It shows that, even without having an investigation, we can make progress and move things forward.”

Growing support from retailers has helped - they have started taking the code seriously, Tacon says, and are upping their game when it comes to training buying teams.

Talking about a recent visit to Tesco’s head office, she adds: “I saw huge evidence of a cultural change that was starting at the top. What I am trying to do across the board is communicate that it’s not about making sure you are compliant and following the rules. It’s about a cultural change.”

“The anonymity issue is a red herring. No one needs to be exposed”

However, not everything is going her way. A YouGov survey of more than 500 suppliers and trade bodies published at the inaugural GCA conference on Monday (23 June) suggests there is plenty more to be done. It found a surprising number of suppliers had little knowledge of the code - 13% of direct suppliers were completely unaware of it, and a further 21% said they were aware it existed but knew nothing more.

The survey also revealed fear of retribution remains a major concern: it was by far the biggest reason given by suppliers for remaining silent on issues with retailers. Although 80% said they had had issues over the past 12 months, only 38% said they would consider raising them with the adjudicator. Of those that said they wouldn’t, 58% cited fear of retailer retribution as the reason.

Tacon is eager to change this. She says suppliers shouldn’t fear reprisals, stressing she has a legal duty to protect the identity of her sources.

“The anonymity issue is a red herring. I can understand individuals thinking ‘I don’t want to risk my business!’ but they don’t realise it is happening across the board,” she says. “No one needs to be exposed because these issues are so common. If someone has been on the receiving end of a particular practice for years, they will not be the only one.”

If suppliers are confident about coming forward, then Tacon says she has a chance of solving problems quickly.

“My ideal situation would be for a retailer to launch an initiative, lots of people look at it and say that doesn’t feel right, I know about it within 24 hours, I talk to the retailer’s code compliance officer, and within a week it is stopped. That would be the ideal - boom, boom, boom, it’s all sorted.”

In terms of the substantive issues raised by suppliers, Tacon has already outlined the top five - charges for delivery shortages, customer complaint charges, forensic auditing, forecasting error charges, lump sum requests, and packaging and design charges.

Having made progress on forensic auditing, Tacon says she is “warming up” for an investigation on packaging and design charges. The concern from suppliers is that some retailers are pushing through packaging changes several times a year and overcharging for them. No investigations have been launched so far, but Tacon indicates this could change in the future, given that she has so far been unable to convince retailers to agree to limit how often they ask suppliers for redesign payments.

Maximum fine

Another key priority is the maximum fine. Tacon says she would like to see this finalised before pursuing any investigation. She has proposed a figure of 1% of UK turnover, and it was expected this would be agreed by parliament this spring. But because the same people in the Department of Business, Innovation & Skills are also working on the pub adjudicator, this has been delayed.

“I am assured there is no issue; they just haven’t got around to doing it yet,” she says. “The proposed fine is not an issue as I haven’t even started an investigation. But they have got to get it done.”

There is plenty in her in-tray, but Tacon is encouraged by what she has achieved so far.

It’s “more than I thought,” she says. “I thought I would have to go down the investigations route to get change, but I wanted to give the collaborative route a chance, and I have shown the collaborative route can achieve something. This is a faster, simpler, way of moving things forward. And I can do it on a much wider range of things.”