Welcome from the Groceries Code Adjudicator
Serving the sector through the COVID-19 emergency
I am writing this newsletter as we begin to see the first significant easing of restrictions across the economy. The groceries sector has been operating at full throttle throughout these immensely challenging times and I want to pay tribute to the way both suppliers and retailers have performed to keep supermarket shelves stocked. And a massive thank you to the staff working to ensure customers have been able to shop safely and receive regular deliveries.
The stronger and more effective communication between retailers and suppliers that the Code has helped to foster has shown its value in the current emergency and helped maintain very efficient supply chains especially in the early days when supplies of particular products came under huge pressure.
I should now be in my final days in office as the GCA but I wanted to play my part in the response to COVID-19 and offered to extend my contract in order to provide the continuity the sector needs. I agreed to stay on beyond 24 June for a short period to deal with any issues arising from changes to supply arrangements during the early stages of the emergency.
Since the beginning of the emergency I have been urging suppliers to raise any issues straightaway with the retailers. However, from my initial research there is no evidence that suppliers have been raising issues with the Code Compliance Officers or asking for buyers’ decisions to be escalated. If there are issues and they are brought to me for resolution I will as always deal with them on a case-by-case basis but they should first be raised with the retailers directly at the earliest opportunity.
The Government is appointing my successor and I am expecting an announcement shortly. My successor will take office at a good time. The initial work of the GCA is largely done and I believe the Code provided the framework for progress as well as the flexibility required to maintain groceries supply to consumers at the most difficult of times. I look back on the past seven years with a great deal of pride. I took on this role because I wanted to make a difference and I believe the sector is now in a much fairer place.
The success of regulation under the model I have adopted is prompting growing calls for the role of GCA and the scope of the Code to be extended, whether further up the supply chain or to more retailers. The new GCA is bound to have new ideas, but I hope they will continue the initiatives that have worked. I wish my successor every success.
I have just published my annual report and accounts for 2019/2020 and they are now available at www.gov.uk/gca. Do take the opportunity to read through them. In the report I highlight a number of important areas of progress since I was appointed as GCA, including the following examples:
- We have seen an increase, not a decrease in competition in the sector as three more retailers have exceeded
£1 billion turnover of groceries and been designated by the Competition and Markets Authority.
- Working between retailers and suppliers has become more efficient, for example the business practices implemented in response to inconsistencies arising as a result of drop and drive have eliminated masses of paperwork as well as reducing time wasted on challenges.
- Suppliers feel more able to challenge the retailers to get the best joint solutions – no longer is the response “how high?” when the retailers ask them to jump.
- Fresh produce suppliers have been growing in size and are confident under the protection of the Code to work closely and on longer contracts with retailers and consumers have benefitted from an increase in innovative products on the supermarket shelves, created by a growing number of speciality suppliers.
- The original 10 regulated retailers are now exemplars among businesses for paying on time. The Duty to Report on Payment Practices and Performance shows they paid between 93% and 100% per cent of all their invoices on time, whereas only 13% of all the suppliers to those retailers achieved the same level of prompt payment.
2020 GCA survey
My seventh and final survey ran from 4 February to 29 March and attracted a record number of responses, including 1,480 from direct suppliers.
Despite including a three-week period covering the early, challenging days of COVID-19 and the inclusion of a new retailer the number of suppliers experiencing a Code-related issue fell to an all-time low. The figure is now just 36%, down from 79% in 2014.
Suppliers recognised improvements across every Code-related issue and last year’s top concern for suppliers – forecasting – fell from 15% to 13%. Delay in payments and De-listing – the other most common issues experienced by suppliers – are both now at their lowest reported level at 12% apiece. The graphic below shows the progress on every Code-related issue since 2014.
Suppliers also reported a very high level of Code-compliant behaviour from retailers – as this graphic powerfully represents. It is now extremely tight at the top with 10 retailers rated between 92% and 96% as complying consistently well or mostly with the Code. Only three retailers were rated below 90% – which was the best score in 2014.
I was particularly delighted to see that suppliers have recognised the improvements in compliance by Co-op which has taken them from tenth place to second in a year. I worked closely with the retailer for eight months following my investigation and it is testament to the huge progress the retailer has made embedding the Code throughout its organisation.
Farewell and thank you
This is my final newsletter and I want to thank all those who have played a part in achieving this success – especially the suppliers who have completed my annual surveys and brought my attention to issues, and those who have responded to my urging to get trained. In particular I want to pay tribute to the Code Compliance Officers who strongly supported my collaborative approach and took up my challenge to be my eyes and ears within their companies and make the Code work for the benefit of all – retailers, suppliers and customers.
With very best wishes for now and the future.
Meet the CCOs
Ruth Clarke, CCO at TJ Morris Limited (trading as Home Bargains) and Tim Belser, CCO at Asda Stores Limited (Asda) have answered News from the Adjudicator’s questions.
Tell us something about yourself and your path to becoming a CCO?
I am a commercial solicitor and I sit within the legal function of Home Bargains. I report directly to our Group Legal Council and audit chair. Essentially, I am responsible for ensuring compliance with the Code. My role is to understand, and identify Code related issues.
What are the most challenging aspects of your CCO role?
Achieving effective compliance without excessive administration to ensure responsible business continuity.
If you could change one thing about the groceries market, what would it be?
To reduce the amount of unnecessary and non-recyclable packaging.
What achievement as CCO are you most proud of?
Having achieved 92 % in first survey results of 2020. And having received an acknowledgement for that achievement from the Adjudicator.
What 3 things do you want to achieve in the next 12 months?
- To maintain efficient and responsible business
- To reinforce the good work which we have started in achieving Code compliance
- To assist the buying team in maintaining good relations with our grocery supplier base. I believe that for compliance to be effective it must be simple. And I want to continue to develop and integrate a compliance function which relates to our strategic objectives.