Tesco

The Tesco financial reporting misdemeanours have had fascinating repercussions. Media coverage has brought supplier payments into the public’s gaze and they hate big retailers for it. The result is that our GCA has the power to fine.

I’m glad the public have a bit of balance; they previously even believed their supermarket funded all those offers they see! The negativity around supplier income is being way overplayed, though. suppliers actually compete to be on the promotional ends. It’s quite right that charges should be made to them and, if well managed, it is good business for both parties. The portrayal of promo payments as heinous bullying clouds real issues such as unilateral invoice deductions, stealthy lengthening of payment terms and retrospective penalty charges.

So, will things change? Suppliers who are looking forward to a list of quick fines, then a future of walking hand in hand along collaboration beach, should think again. Firstly, retailers have had years now to get smart on GSCOP. Supplier contracts are protecting their actions, sliding them inside the code. Using language like ‘request’ instead of ‘require’ passes legal scrutiny, too. Secondly, most of the complaints I see are not unfair practice at all, just suppliers’ inability to negotiate well. That is their problem, not the GCA’s. Invest in some training, folks! The website is below…

While this unfolds, consider the backdrop - the real strategic issue of the big four competing with discounters - and expect conversations to go down a brutal pricing cul-de-sac. It has to happen - it’s strategically correct. Then, a range cull: again, strategically correct. In this commercial cauldron, the GCA is attempting to cool the ‘climate of fear’ that prevents suppliers coming forward to report genuine GSCOP contraventions. Yet there is vagueness within the code itself, which means a supplier’s business can be hit hard within the code at a range review, for instance. It will take the relevant experience and plenty of resource to see the truth of these protracted negotiations (lawyers are certainly not the best people to pick this apart). A move in the right direction for sure, but there’d better be some resource behind it, too.

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