CPI issues dominated the GCA conference. Let’s stamp out the unfairness

The GCA conference last week had all the usual themes: GSCOP drives hugeimprovement, fear of retribution has half of suppliers refusing to use it. Butwhat was very different this year was that cost price increase (CPI) relatedissues dominated the conference. I’m glad that wasn’t ducked. It highlightsagain that CPI is a glaring omission from GSCOP – and that it needs amendment.

There was visible confusion over the role of GSCOP. I heard “GSCOP is aboutinnovation” and “developing collaboration is why GSCOP exists”… hmm, notreally. As per the definition on the government website, GSCOP sets out howdesignated retailers are expected to fairly manage their relationships withsuppliers. It’s about fairness, and collaboration is not necessary forfairness. A fair fight is still a fight.

The trouble is, the fight isn’t fair on CPIs, which are not specified in GSCOP.GSCOP interferes already with negotiations on listing, delisting, promotions,payment terms, wastage, shrinkage, position on shelf and supply chainprocedures. All of these were negotiable before, and they still are now. So whynot include CPIs too?

I don’t want to make negotiation easier for naive suppliers, as the consumerwould lose out. But GSCOP says the treatment of suppliers must be fair. And howcan you even have a fair negotiation when a retailer can tread on a supplierlike an ant without even knowing they’ve done it?

Retailers always claim they prioritise supplier relationships. They say“without our supplier partners we wouldn’t have a business” and “we don’t wantto just follow the letter of the code if it leaves our suppliers unhappy”.Sweet Jesus.

What they mean is, they don’t want to put suppliers out of business. The idealsupplier appears to be one that is just above the survival line. Any form ofshareholder value is there to be attacked. As they see it, that’s still fair,still in the spirit of the code, still negotiation.

Banging on about collaboration is not an answer in short-term tough times.Retailers give only lip service to the seven golden rules they have alldeclared as best practice.

Both sides struggle today to make profit. But retailers have control of theirsell price as well as their costs, while suppliers believe they have controlover neither. They do, of course – they just lack the knowhow on CPI. If webelieve retailer delays specifically are unfair, these can be addressed.

Retailers should stop demanding more information so they can decide howjustifiable a CPI is. That’s not their role. Retailers have no right to knowthe pressures on an individual supplier. They should assume the new price isjustified based on their market intelligence, and follow the code while tellingthe supplier if they still want it within 30 days. Instead, they are pretendingtheir analysts are better than the ones in suppliers, who are taking all therisks.

There will always be disputes when the negotiation fairness is fundamentallynot there. Axe the adjudicator? Surely our government would not make a glaringerror on that scale!

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