Inflation has weakened the relationships between the UK’s
designated retailers and their suppliers, the Groceries Code
Adjudicator’s (GCA’s) 2022 sector survey reveals today. Key
findings of the survey include:
- A quarter (26%) of suppliers said they had experienced a
refusal by a retailer to consider a request for a cost price
increase (CPI) or an unreasonable delay from the retailer in
concluding the request. It is the most raised issue in the GCA’s
surveys over the last five years.
- Overall, 80% of suppliers had asked for at least one CPI in
the previous 12 months.
- After year-on-year improvements in retailer-supplier
relationships to 2021, the survey now shows a fall in the number
of suppliers not facing any Code-related issues from 56% in 2021
to 47% in 2022.
The
results, from the survey run by YouGov, suggest that
following two years of pandemic where retailers and suppliers
worked closely together and improved their relationships, the
pressure from rising prices has strained relationships, and
Code-related issues between the two have also risen.
In response to these difficult conditions, retailer performance
is mixed. Aldi returns to the top of the leader board with a
score of 98% and in total five retailers either improved or
maintained their score despite sector challenges. However, the
other eight retailers have seen falls (of up to 11%) in the way
that their suppliers have scored them.
Mark White, the Groceries Code Adjudicator said:
“Inflation has affected the entire groceries sector as witnessed
by the sheer scale of requests from suppliers to increase prices.
“I am concerned that the pressure has impaired relationships and
created wider problems. My priority is to work with all the
retailers to ensure they treat their suppliers fairly as they
navigate the cost price process during this difficult time.
“It is also important that suppliers confidentially report any
issues they have so I can take them up swiftly with the
retailers.”
The 2022 Groceries Sector Survey
There were more than 2,500 responses to the 2022 Groceries Sector
Survey – the 9th conducted by the GCA. For the first time
suppliers were asked about whether they had been affected by
either a retailer refusing to consider a CPI request or an
unreasonable delay in agreeing or in implementing an agreed CPI.
The survey provides detailed information on the issues facing the
whole industry, supplier knowledge of the Code and the GCA, and
their feedback on the performance of the retailers.
Code compliance
The survey shows reduced Code-compliance compared to the previous
year. Only 47% of suppliers have experienced no Code-related
issues compared to 56% in 2021.
8% of suppliers raised an issue with a retailer in the past 12
months which is, despite the fall in the number of suppliers
without any Code-related issues, consistent with the 2019-2021
results.
Inflation and CPIs
The groceries sector, along with the wider economy, is suffering
from a perfect storm of supply chain shortages, and higher
energy, raw material/ingredient, and packaging costs. This
significant inflation is affecting suppliers of all types of
grocery products. Of those surveyed at the start of 2022, 80% had
asked for a CPI.
However, one in four (26%) of the suppliers have been affected by
the refusal of a retailer to consider a price increase request or
an unreasonable delay in concluding the request. No other issue,
either Code-related or non-Code-related, has been raised by a
higher proportion of suppliers in the last five years.
De-listing
A de-list often follows an unsuccessful CPI negotiation, which
might explain why 16% of suppliers raised issues with de-listing
without reasonable notice (compared with 12% in 2021). There was
also a 3% rise in retailers not meeting their duties in relation
to de-listing (from 6% to 9%).
Other issues
A number of other issues were also raised by suppliers,
including:
- Delays in payments: 12% of suppliers raised delays in or not
receiving payment when there are disagreements about deliveries
(up from 8% in 2021).
- Invoice discrepancies: 18% of suppliers highlighted that
processes and procedures in place to enable invoice discrepancies
to be resolved promptly were inadequate (up from 14% in 2021).
- Forecasting errors: 18% of suppliers said they had been
affected by incurring significant costs because of inaccurate
forecasting by retailers (up from 16% in 2021).
Next steps
Following the publication of the results, YouGov is undertaking a
series of deep dive interviews with suppliers on behalf of the
GCA. The results will provide greater depth of understanding
about the issues that suppliers are facing.
The results will be shared at the GCA’s annual conference in late
September. Details of the annual conference will be published on
the GCA website shortly.
Further information
The survey was open between 17 January and 27 February 2022.
An information pack with a full breakdown of results is available
here: GCA 2022 Groceries Sector
Survey results (PDF, 369
KB, 7 pages)
