If the government doesn’t make a decision on the Grocery Code Adjudicator by 25 June, the role will cease to exist. And given the chaos in the Conservative Party right now, I’m not entirely convinced they will.
A statutory review was carried out in October and was due to come out in the spring. But publication was delayed partly because of the snap General Election and partly because of the paralysis over the separate consultation into the extent of the GCA role, also launched last October, with ministers non-plussed at the lack of evidence to support an extension of the remit to include other retailers and non-direct suppliers.
Some of you will be whooping with joy at the prospect of Christine Tacon packing her bags. Others will be afraid. Not least those suppliers to Sainsbury’s who have been ‘asked’ this week to lower their prices by 20%. Or else.
As the slides from its IGD presentation show, it’s concerned not only about its lack of differentiation, but about what it provocatively calls the ‘brand tax’ (of 63%) the big four are charging vs the discounters on the same lines. Ouch.It’s no surprise Sainsbury’s is going back to its suppliers for help. While the Argos acquisition has performed better than expected so far (while lifting food sales in those stores by 1-2%), overall food sales have disappointed. Despite abandoning bogofs in favour of price-only promos, Sainsbury’s has found its price competitiveness deteriorating. There’s always been an air of smugness about its ability to charge a slight premium, but it’s not so slight any more and evidently enough is enough.
Sainsbury’s has form when it comes to attacking brands but this time one gets the sense it means it. It needs to simplify its range and differentiate more. The trouble is Tesco is two years further down this line. Sainsbury’s blunderbuss approach is reminiscent of Project Reset 1, but Tesco has really mastered the art/science – so much so it came top in the latest Advantage survey. And it’s pulling off a stunt like that, while keeping prices down, and growing sales and innovation, that saw Tesco voted Grocer of the Year at The Grocer Gold Awards this week.
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