In graphs: Which supermarkets have slipped in GCA table and why

With M&S taking pole position for the first time with a record score since the survey began, today’s results were bad news for all-conquering Aldi and the UK’s biggest retailer Tesco, which slipped from top and second respectively to languish in mid-table.

The survey begs several questions, but these are the key ones.

Why has the GCA ‘golden child’ Aldi seen its halo slip?

Having topped the table for eight of the past 10 years, Aldi’s fall to seventh is in stark contrast to its breakthrough into the big four during the same period.

Its fall is the biggest of any retailer, and for the UK’s fastest-growing retailer to see the fastest decline in supplier relations suggests all may not be coincidence.

Earlier this year the discounter announced its global sourcing division would take a lead on procurement of goods sold globally, whilst the introduction of its IT system, Ahead, is one of several new systems brought in by retailers to have caused ructions with suppliers.

One source suggests Aldi’s decline could be a symptom of “growing pains”.

“It is growing so fast, the challenge is dragging suppliers along with them, especially on how you keep up with availability when there are such challenges in the supply chain. That inevitably causes tensions.”

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Aldi insists it still regards its performance in the GCA table as a key priority, and points to the fact that the adjudicator’s survey shows it still ranks first for fair trading relationships and conducting negotiations in good faith and without duress, and for consistently complying with the Code, with 95% of direct suppliers rating Aldi positively.

But Ged Futter, founder of the Retail Mind, describes its fall as “meteoric” and says it is very worrying to see the UK’s two most influential retailers both falling well down the GCA league table.

“Amazon’s dismal score may stand out for some but Aldi and Tesco have much more of an impact on the overall supply chain,” he says. “Aldi’s performance is far worse than it ever has been.”

A source says particular problems have arisen in fresh produce, with Aldi clashing with suppliers as it looks to tackle supply chain shortages and keep up its challenge to the traditional supermarket big four.

If Tesco is sixth now, where on earth will it be next year after the fulfilment fees fiasco?

Tesco’s fall from second to sixth in the table ignores a pretty massive elephant standing in the negotiations room and GCA towers.

The supermarket’s bombshell request for suppliers to begin paying fulfilment fees for using its online and Booker wholesale platforms landed in March, just days after this year’s GCA survey closed for responses.

Whether that was coincidence or not, it’s a fair bet to assume Tesco’s fall down the table would have been more spectacular than the 2% fall in its score.

“Tesco is one of the two retailers that has slipped,” says White. “They are in sixth place and that was before the fulfilment fee was a thing.

“What they do for the remainder of this year will be at the forefront of suppliers‘ minds when they complete my next survey.”

White says regardless of the unfortunate timing, his inquiries into Tesco are continuing, despite the retailer rowing back on its initial threat that companies who refused to pay the fees would be delisted.

It has since announced a new reset (‘Fit for Change’), said by some sources to be on an even grander scale than Dave Lewis’s Project Reset programme, due to start in September, as well as increases in logistics fees for some suppliers.

“There are a number of issues currently with Tesco,” says White. “There is the distribution fee change, Fit for Change and fulfilment fees.

“At the moment I’m still engaged with Tesco to ensure that Ashwin Prasad’s promise of no retaliation, no negative consequences for fulfilment fees is upheld.

“I still want to hear from any suppliers, especially if they feel they are being pressured or have suffered some form of repercussions.”

What will happen to Amazon after recording ‘worst score ever’?

The online giant was included in the survey for the first time since it was designated under GSCOP last year, and has set a record for the worst score in the decade since the survey began.

Nearly 12% of suppliers who responded said it never complies with the code, while a further 30% said it rarely did.

Its overall score of less than 60% compliance compares to an average of 77% in 2014, which is regarded today by some as the “wild west times”.

It’s clear changes Amazon has introduced to its delisting procedures, following controversy over how its algorithm-based system has led to companies being culled with as little as 24 hours’ notice, have gone nowhere near far enough where suppliers are concerned.

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But the big question is how long before the adjudicator, with his powers to fine up to 1% of turnover or around £236m, is prepared to be patient.

White says Amazon has “no excuse” for its score, which he says involved a “whole collection” of overarching issues revolving mostly around communications with suppliers.

“We are in dialogue with Amazon’s senior management about how they intend to tackle these issues,” he says. “The survey clearly signifies concerns about how Amazon is treating their suppliers.

“The ball is now in their court, but make no mistake, I’m prepared to use all of the power at my disposal.”

 

Martin Heubel, director of Consulterce and a former Amazon exec, says suppliers are still being plagued by “a lack of communication”, unclear reasons for products being delisted and short-notice terminations for unprofitable items under its controversial CRAP (can’t realise a profit) algorithm.

But he says, while disappointing, the results highlight GSCOP itself may need a “fundamental update” to reflect the digital age. “Now Amazon has become the first truly digital grocer to be included in GSCOP. Consequently, we cannot ignore the fact that Amazon’s business model as a marketplace with first and third-party sellers is difficult to compare to that of Tesco, Sainsbury’s and the like.”

Whilst many will find it hard to sympathise with such a global goliath, especially one out to eat the lunch of its rivals, it is undeniable that it did not start out as a grocery retailer.

It also works with a far larger number of suppliers than other retailers, which, sources say, requires a different approach.

Have relations between suppliers and supermarkets really got better since last year’s annus horribilis?

M&S’s score in this year’s survey was not just any score, it was a GCA record, with no fewer than 99% of suppliers saying it consistently or mostly followed the code.

That’s despite another torrid year for retailers in which more than 91% of suppliers made at least one CPI request, up from 80% last year, and many on multiple occasions.

Adjudicator White says he’s encouraged by the fact 12 out of 14 retailers delivered scores of 90% or above, but there is a more ‘glass half empty’ way of interpreting the scores.

“In terms of issues experienced, it is an indicator of the effectiveness of the code and the GCA that, at a time when inflation challenges were arising, nearly half of suppliers had experienced no issues with the code (49%),” says John Noble, director of the British Brands Group.

“But looking at the top six issues experienced, there is marked commonality between those raised in 2022.

“Data input errors is the only new practice to enter the top six (affecting 10% in 2022 and 16% in 2023). This suggests to me that the fundamental practices that concern suppliers are entrenched, and retailers are not making progress in addressing concerns. In fact the signs are that, in all these areas bar one, the situation is deteriorating.”

 And whilst inflation has again dominated the survey, White himself believes the next challenge is already coming over the horizon as supermarkets put suppliers under pressure to reverse the trend.

“I haven’t seen any evidence of code issues yet, but I will be closely monitoring supermarket activity to see what practices they use as inflation peaks and they try to get prices down,” he said.

“I want to make sure the same principals of fair dealing apply on the way down as on the way up.”

That’s a phrase suppliers will no doubt be clinging onto as the results of the table and its impact on the grocery market sink in.