Small business minister Jane Hunt by now has recognised her blunder intargeting the GCA role for efficiencies: the GCA office is funded by the 14retailers it governs. But questioning its suitability is right. After all, theGSCOP survey in June showed relations had deteriorated for the first time sincethe role was created.
Overall, has GSCOP helped? Yes, absolutely. Is GSCOP fit for purpose today?Clearly not!
Inflation has exposed a weakness in the code on cost price increases (CPI), asI pointed out two months ago. The GCA, therefore, is right to have intervenedin the CPI debate, given that’s where the issues are. But it’s done the rightthing wrong in publishing a set of ‘golden rules’ for retailers dealing withCPIs from suppliers.
It’s very easy for a buyer to be clean on GSCOP while mocking the ‘goldenrules’, which are all obvious and good – unless a buyer intends to make lifedifficult for the supplier. Here’s how a hard buyer would see them:
What the rules say: Retails must give clear communication from the outset aboutthe process and how long it will take. What buyers think: It takes two days toimplement a CPI so a four-week opportunity would be ample, but I can easilyjustify 12 weeks and string it out.
What the rules say: Maintain awareness, and prioritisation, of the possiblegreater impact on smaller suppliers. What buyers think: Not my problem, buteasy to blag that I care.
What the rules say: Buyers should have support from colleagues who haveexperience of dealing with CPI requests. What buyers think: It’s bleedingobvious how to logically review and accept a CPI. It’s just as obvious how todelay and challenge, so that suits me better.
What the rules say: Only ask for the specific information from suppliers thatis needed to make a CPI decision. What buyers think: Previous CPI timing andlevel. That’s it. I already know. Inflation on raw materials, labour andlogistics costs. But I want to tie them in knots so I’ll ask for productbreakdown formulations and much more believably important stuff.
What the rules say: There should be clear communication of the outcome, sothere are no grey areas. What buyers think: Well, I’ll start by refusing theCPI point blank. Couldn’t be clearer.
What the rules say: There must be no automatic delists or fixed delist noticeperiods following CPI negotiations. What buyers think: I don’t have to delistthem, just refuse to pay the new price. They have a choice to supply me or not.Anyway, I can justify any ranging decision I make without mention of CPI.
What the rules say: Buyers must abide by competition law, eg never askingsuppliers about other retailers’ plans or retail prices. What buyers think: Noprobs, never in doubt.
The Adjudicator has no powers to enforce these rules, because GSCOP doesn’tspecifically set out guidance on CPI. So change GSCOP, like they did inAustralia.
All that said, grocery supply is abstract to government and the CMA would beutterly hopeless. Whether or not Jane Hunt remains in place, keep the GCA,amend GSCOP.
