The Groceries Code Adjudicator has issued a stern warning to supermarkets over unethical supplier fees. The advisory follows concerns related to ‘pay to stay’ tactics. Tesco’s recent supplier fulfilment fees sparked industry concerns. Retailers are urged to document compliance with the Groceries Supply Code of Practice (GSCOP). Suppliers express frustrations over restrictive investment demands.
The Groceries Code Adjudicator, Mark White, has delivered a firm reminder to supermarkets, urging them to reassess their practices concerning ‘pay to stay’ demands on suppliers. This follows reports suggesting that some retailers, notably Tesco, have introduced new fulfilment fees requiring suppliers to contribute financially to retain their shelf space.
In March, Tesco implemented a programme where suppliers were asked to pay for utilising its online and Booker wholesale services, warning of potential delisting for non-compliance. Nevertheless, they later reiterated that participation in the scheme was voluntary. Despite this, the move has been viewed as a ‘warning shot’ by the industry.
White emphasised the importance of fair treatment, stating, “I am determined to ensure that all 14 retailers are treating suppliers fairly and lawfully.” He urged retailers to adhere strictly to the Groceries Supply Code of Practice (GSCOP) and refrain from enforcing any actions that fall outside its legal boundaries. The Adjudicator has made it clear that any perceived breaches will be challenged, with retailers required to provide evidence of compliance.
Ged Futter, founder of The Retail Mind, commented on the situation, highlighting that suppliers are being urged to shift all investments into case costs. This approach has created unease among suppliers who prefer diverse investment options rather than being constrained by unilateral demands. Futter cautioned that Tesco’s stance might lead to challenging discussions with suppliers, especially if delisting threats intensify.
The current friction coincides with other challenges facing Tesco, including impending strikes at one of its depots. Workers in cleaning and catering roles have been subjected to new contracts without accompanying pay increases, adding to the retailer’s ongoing operational difficulties.
The scrutiny over ‘pay to stay’ practices reflects broader tensions in the grocery sector as suppliers and retailers navigate challenging economic conditions.
