Food retailers grew 10 times faster than suppliers in the UK last year, according to a new study by the DTI, adding fuel to the debate that the major multiples are running away with the balance of power.
The findings come just a week after the OFT, returning its verdict on the much-maligned supermarkets code of practice, revealed that it would have little option but to give the big four retailers a clean bill of health unless more suppliers came forward to complain.
However, the DTI’s Value Added Scoreboard, published this week, reveals that the gap in performance between the major retailers and manufacturers is continuing to widen.
The survey - which compares the fortunes of the top 800 UK and top 600 European companies based on total operating profit, employee costs, depreciation and amortisation - shows that food manufacturing remains the larger of the two sectors, but grew just 1% last year to £21.3bn, while food and drug retailers, dominated by the major supermarkets, grew by 10% to £15.8bn. According to the figures, this is a continuing trend in the UK with retailers having grown by 27% over four years compared with just 11% for manufacturers. In Europe, where the balance of power appears more evenly aligned, food retailers grew 1% last year while food suppliers declined 1%.
The findings are likely to spark calls for a further review into the code of practice with opposition MPs joining the fray.
Lib Dem shadow agriculture secretary Andrew George MP, writing in The Grocer this week, said the OFT had shown itself to be a “toothless” institution, while suppliers said the DTI’s report showed the lack of joined-up thinking in government.
One leading manufacturer said: “The DTI’s findings expose the farcical nature of the OFT’s review and how the right hand doesn’t appear to know what the left hand is doing. Surely these findings should have been made available to the OFT prior to it reporting on the code.”
The OFT said it could not comment, as it had investigated solely the supermarkets’ conduct. It has, however, recognised the lack of evidence from suppliers and given them until May 31 to provide evidence of abuse of power before it washes its hands of the matter.
British Retail Consortium director general Kevin Hawkins said the DTI figures did not show signs of malpractice. “Anyone trying to look at these figures as evidence of the retailers squeezing suppliers will be disappointed - some of the best growth has been seen by suppliers. It is not a story of sectors, it is a story of individual companies.”
Amy Balchin
The findings come just a week after the OFT, returning its verdict on the much-maligned supermarkets code of practice, revealed that it would have little option but to give the big four retailers a clean bill of health unless more suppliers came forward to complain.
However, the DTI’s Value Added Scoreboard, published this week, reveals that the gap in performance between the major retailers and manufacturers is continuing to widen.
The survey - which compares the fortunes of the top 800 UK and top 600 European companies based on total operating profit, employee costs, depreciation and amortisation - shows that food manufacturing remains the larger of the two sectors, but grew just 1% last year to £21.3bn, while food and drug retailers, dominated by the major supermarkets, grew by 10% to £15.8bn. According to the figures, this is a continuing trend in the UK with retailers having grown by 27% over four years compared with just 11% for manufacturers. In Europe, where the balance of power appears more evenly aligned, food retailers grew 1% last year while food suppliers declined 1%.
The findings are likely to spark calls for a further review into the code of practice with opposition MPs joining the fray.
Lib Dem shadow agriculture secretary Andrew George MP, writing in The Grocer this week, said the OFT had shown itself to be a “toothless” institution, while suppliers said the DTI’s report showed the lack of joined-up thinking in government.
One leading manufacturer said: “The DTI’s findings expose the farcical nature of the OFT’s review and how the right hand doesn’t appear to know what the left hand is doing. Surely these findings should have been made available to the OFT prior to it reporting on the code.”
The OFT said it could not comment, as it had investigated solely the supermarkets’ conduct. It has, however, recognised the lack of evidence from suppliers and given them until May 31 to provide evidence of abuse of power before it washes its hands of the matter.
British Retail Consortium director general Kevin Hawkins said the DTI figures did not show signs of malpractice. “Anyone trying to look at these figures as evidence of the retailers squeezing suppliers will be disappointed - some of the best growth has been seen by suppliers. It is not a story of sectors, it is a story of individual companies.”
Amy Balchin
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