It’s a tough time in retail for supermarket buyers and suppliers alike.
Buyers are seeing inflation off the scale, costs rising, and plans being scrapped to accommodate ranges that customers can afford.
Increasingly, suppliers are being met with last-minute changes including de-lists, alterations to promotional plans, and last-minute negotiations on costs or other terms.
For suppliers, there is a degree of protection – the Grocery Supply Code of Practice (or GSCOP (*) as it is usually referred to) was put in place to ensure that conversations are had, and agreements made that are not detrimental to either party.
Below I’ve detailed three useful nuggets that may help shape future conversations and give you some clarity on what is and is not permissible under the Code:
1. Fair dealing
The overarching principle that envelops GSCOP is that of “fair dealing”. Retailers must deal with you fairly in their business interactions and “asks” of you. Demands and ultimatums should not be made, and you should feel perfectly comfortable in declining any requests without the fear of a negative consequence.
Very often the tone of the language or words used to make a request from you come across as being demanding in nature and feel more like a requirement. If this is the case and the “ask” makes you feel uncomfortable, there is the distinct possibility that the fair dealing clause may be stretched or even breached.
2. Reasonable notice
There is no fixed timeframe for what “reasonable” looks like – the standard and often recited 3 months’ notice period is completely fictitious! If you need longer or indeed less time to implement a requested change without incurring additional cost, then so be it! If for example, you have grown a crop or produced a product for a particular retailer you may need a longer timeframe – requiring a 12-month notice period is commonplace in primary agricultural categories such as produce, meat, and dairy.
The code urges you to communicate and reach an agreement for reasonable notice – this is any timeframe that you mutually agree to and could be any length of time – days or months.
3. Retrospective changes
Buyers cannot under GSCOP make a retrospective change to any agreement unless you have agreed on a list that includes what those retroactive changes may be upfront – this rarely happens. Be particularly mindful of requests for lump sum funding, margin support, or other terms improvements particularly at times of financial closure – quarterly or annual arrangements, etc. Make sure any monies requested and subsequently paid were agreed upon as part of the supply agreement – if not, the request is likely to be retrospective.
If you want to learn more about GSCOP, contact our GSCOP expert Simon Latham. Simon is a Grocery Code Adjudicator-approved trainer and has extensive experience training multiple grocers and many FMCG suppliers.
((*) – Covered retailers – Tesco, JS, Asda, Morrisons, Waitrose, Aldi, Lidl, Co-op, TJ Morris, B&M, Ocado, Amazon, Iceland, M&S, and the subsidiaries of the above)