Edition 33: News from the Adjudicator
Read the latest newsletter from the Groceries Code Adjudicator (GCA).
The 2023 results are in!
I was pleased to publish the results from my 2023 groceries sector survey last week.
For the third year in a row, we had more than 2,000 responses to the survey run by YouGov on the GCA’s behalf and I would like to thank everyone who took the time to complete the survey. The information you provide is invaluable for aiding my understanding of the trends affecting the sector and potential risks of Code breaches by the Retailers.
I would also like to extend my gratitude to the Retailers and trade associations who shared the survey and encouraged suppliers to respond.
The survey results, echoing the 2022 survey, highlight the impact that inflation has had on suppliers and their relationships with Retailers. 91% of suppliers asked for a cost price increase (CPI) in the past 12 months and I was disappointed that those who experienced either a refusal to consider a CPI or an unreasonable delay in agreeing or implementing a CPI rose from 26% in 2022 to 28%. It is the most raised issue in the last 6 years. Although there are suggestions that inflation may have reached its peak, prices will continue to rise for some time and I will continue to monitor Retailers’ handling of CPI requests. As prices start to fall in some limited areas, I will also be looking at Retailers’ requests for cost price decreases and want to hear from suppliers who have concerns about the fairness of Retailer processes.
In addition to compressing margins throughout the supply chain and reducing consumers’ spending power, the survey indicates that inflation is likely to be exacerbating other issues faced by suppliers:
- One quarter (up by 7% on 2022) of suppliers experienced inadequate processes and procedures in place to enable invoice discrepancies to be resolved quickly.
- 16% of suppliers said they had experienced data input errors including price errors not resolved promptly (within 7 days), increasing from 10% in 2022.
I believe that often fraught and lengthy CPI negotiations may have contributed to an environment where mistakes are more likely, directly increasing the occurrence of these issues.
Other issues were also raised including delays in payment, obligations to contribute to marketing costs and issues related to forecasting all of which saw an increase in the number of suppliers impacted. The results pack includes a breakdown of all the issues raised.
However, there is also plenty of good news contained within the results. I was pleased to see that suppliers believe Code compliance has improved across the sector. 8 of the 13 Retailers included in the 2022 survey improving their overall compliance score by 3% or more, while only two Retailers saw a decline in their scores.
In my engagement with suppliers, I have been highlighting both my own and also the Retailers’ Code Compliance Officers’ (CCOs) commitment to confidentiality, so I was glad to see supplier confidence in raising an issue with the GCA rise by 3% to 58%. I also worked with all the CCOs to agree an extension to the confidentiality commitment to protect and strengthen relationships with suppliers. Concerns about confidentiality remain the main reason for not reporting an issue however the number of suppliers highlighting it has fallen by 12% since 2019. I hope that as more suppliers become aware of the extension, this figure declines further over future surveys.
Turning my attention to the individual Retailers, I want to congratulate M&S which came top of the rankings this year with 99% Code compliance; the highest score ever received. I also want to mention Iceland, who were the most improved Retailer with a 6% increase in their score.
At the other end of the rankings, Amazon scored 59% which is significantly below the other 13 Retailers. This is the first time Amazon were covered by the survey and their score is similar to the lowest scores in the first survey undertaken by the GCA ten years ago. In that survey, scores for overall compliance with the Code for the ten then-designated Retailers averaged 73%. In the 2023 survey, after a decade of action by the GCA, suppliers reported significantly improved compliance, with an average of 92%.
I will be working with Amazon, and all the other Retailers, to pinpoint the most pressing issues and develop solutions that will improve their treatment of suppliers and therefore their scores in future surveys.
YouGov is set to carry out a series of deep dive interviews with suppliers on the GCA’s behalf, to provide greater depth of understanding about the issues raised in the survey. As in the last couple of years, YouGov will discuss what they learned from the interviews at my annual conference which will take place on 28 September 2023. I will share details of the conference and how to sign up on the GCA website soon.
Future of the GCA
You may have seen the announcement that the GCA will not be merged with the Competition and Markets Authority as the Government recognises the GCA’s importance in “ensuring our food supply chains function as they should.” I welcome this news and the certainty it gives to the groceries sector.
Finally, if you received this newsletter via email, you will have noticed it has a new look and feel. I hope you like it. If you have feedback, please send it to enquires@groceriescode.gov.uk. If you are reading this on my website but want to receive future newsletters into your inbox, you can sign up here.
Meet the CCO - Alex Wood, CCO for Aldi
1. Please introduce yourself to readers of News from the Adjudicator, including telling them something about yourself as a person. Why did you want to become a Code Compliance Officer and what experience do you bring to the role?
Having joined Aldi in 2012, I have worked in various roles across the business and within different departments including Store Operations and Finance & Administration. In February 2023, I took over responsibility for the role of National Compliance Officer for Aldi.
My Director responsibilities now include Risk, Compliance and Data Protection across the UK and Irish business, which incorporates the important role of the Aldi Code Compliance Officer (CCO).
2. How do you work with suppliers and how should they contact you if they have an issue to raise?
The most efficient and effective way to clarify or resolve Code-related issues is for suppliers to engage with their buying teams directly. ALDI’s buying teams will always try to resolve any issues where they can, in line with Code provisions and in the spirit of the mutually beneficial partnerships that ALDI values.
If for any reason suppliers feel unable to talk directly with their buying contacts, my role as ALDI’s CCO will continue to provide an independent channel for suppliers to seek Code guidance or explanation. If a resolution is still required, it can be helpful for me as CCO to broker direct discussions between the supplier and the relevant buying teams. In these rare instances, I will always treat the supplier’s details and issue in the strictest of confidence unless the supplier provides me with explicit consent to discuss the matter with anyone else at ALDI first.
3. What is your biggest ambition as Code Compliance Officer?
My biggest ambition as CCO is to continue the fantastic work that has gone before supporting the collaborative approach to ensure strong partnerships with our suppliers.
ALDI has historically performed very strongly in the GCA Survey placing first in 8 out of the 10 surveys run to date. It is important to me that we listen to the results of the survey and continue to perform strongly in being a supportive and sustainable partner.
4. When you look back at how your company works with suppliers what are you most proud of?
I am proud that ALDI as an organisation has always been committed to doing the right thing and that great value is placed on being a supportive and sustainable partner, facilitating growth for both us and our suppliers.
The economic environment has been extremely challenging over the last few years. Strain has been placed on all market participants with the overlapping impacts of COVID, the Ukraine conflict and inflation. It is therefore more important than ever that we work together collaboratively.
5. Where has the Groceries Supply Code of Practice had its greatest impact? What contribution do you believe the Groceries Code Adjudicator has made? How do you work with the GCA?
The Code and the GCA, have been fundamental in levelling the playing field in what suppliers can expect from their relationships with retailers. The Code has provided a clear framework in which regulated retailers can be confident that they are working fairly and appropriately with their suppliers.
When looking at the GCA survey results since its introduction, the impact that the Code has had is evident in the overall improvements reported by suppliers. My regular progress meetings with the GCA allows us to work collaboratively and understand the GCA priorities for us to focus on, as well as learn of any best practice that we can implement to make further improvements to our way of working with suppliers.
6. Where would you like to see further improvements in the relationship with suppliers?
ALDI‘s market share (according to Kantar data) continues to grow allowing the business to invest in its expansion and partnerships. I would like to see the mutually beneficial relationships between ALDI and our trusted suppliers continue to grow alongside this.
I hope that it is rare that suppliers face Code-related concerns or issues, but where they do, they are able to resolve them quickly and efficiently by contacting their buying teams directly. I would always encourage you to engage your buying contacts as soon as you feel an issue may be developing, so that things can be addressed as quickly as possible.
However, as ALDI CCO, part of my role is to provide an independent channel for suppliers to seek further Code guidance or support, and I will always welcome suppliers contacting me directly whenever they feel this would be helpful.
I can be contacted via email at CCO@aldi.co.uk or via telephone on 01827 710859.