Looking backwards is generally a great way to identify what has worked well and what – with the benefit of hindsight – could have been done better! It’s usually a good thing to do in a fast–moving retail environment and helps to predict the outcome of future events and activities.
However, looking backwards to retrospectively apply extra fees or to change already agreed terms of business is not such a good thing to do in business. In fact, the 13 leading UK GSCOP covered Grocery retailers, including the newly recruited B&M Bargains and Ocado are unable to legitimately make retrospective requests if GSCOP is to be adhered to. Failure to follow, may result in a hefty fine.
Poundland has recently faced the ire of its suppliers after it applied 2% retrospective overriding discounts with them – whilst for Poundland this does not represent a breach of GSCOP as it isn’t covered, it does demonstrate some questionable behaviours once associated with a more transactional (and now frowned upon) trading mentality. The introduction of GSCOP and its application over the last 10 or so years has certainly encouraged collaborative supplier / retailer relationships that on balance have dramatically improved how the two parties interact and the benefits they both enjoy.
Interestingly, we are also now hearing more about some of the bigger suppliers and how they would also benefit or learn from following some of the GSCOP principles. Christine Tacon in a recent Grocer article, highlighted how suppliers such as InBev, Hovis and Heinz are paying their raw material suppliers up to 15% outside of their agreed terms – often dramatically slower that the multiple grocers who are in the spotlight. It would be a great thing if those companies further up or down the supply chain gained a working knowledge of and adopted (in a non-binding fashion) some of the key principles of GSCOP.
At a time of challenge for the UK retail market, an efficient supply chain would provide a much welcomed boost.
For retailers, changing terms, introducing overriding discounts, new fees or other benefits is absolutely legitimate – but their introduction and the benefits that both sides glean, has to be compelling. Introducing an override for example is completely acceptable – but it is worth launching one – forward looking – that encourages and harbours supplier growth.
At 4C Associates, we provide both retailer and supplier GSCOP training. As a Groceries Code Adjudicator (GCA) approved training provider, we can tailor your training so that examples and the content is 100% relevant. Additionally, we work with suppliers to advise on any live scenarios that are deemed to be flaunting GSCOP, building a tactful response and action plan where necessary.
Simon Latham
