Among a host of new tough tactics uncovered this week by The Grocer, Sainsbury has written to suppliers in one category asking them to hand over 1% of their sales to cover the costs of employing an outside field sales agency.
One supplier claimed it was a “scam of the highest order”, although Sainsbury insisted it was merely looking at “new ways to drive sales”.
However, the timing could hardly be more embarrassing for the retailer. The Grocer last week revealed how Sainsbury was trying to force suppliers to wait 50 days to be paid. It is now also known to have issued six key corporate values to staff before Christmas, including ‘Respect for the individual’ and ‘Treat every pound as your own’.
Tesco has now also outraged suppliers by telling brand owners in the chilled yogurts and desserts category that it plans to introduce an e-auction bidding process, a system more widely used to tender contracts for commodities such as milk and own-label cheese.
It is believed to be one of the first times the system will have been used to pick suppliers of branded items and will mean products are chosen on a financial basis, rather than merit or consumer demand. Meanwhile, Somerfield, which is integrating more than 100 Safeways, has written to suppliers requesting a 3% cut in prices as it tries to persuade them of the merits of sending product to a larger estate.
Also the subject of supplier displeasure is Asda, accused of delisting products without warning, often just weeks after launch, leaving suppliers to pick up packaging and development write-off costs. The code says the multiples must give reasonable notice of such changes.
One key supplier to three of the major multiples said: “It’s like they’re just ripping up the code of practice and don’t give a damn about the consequences.”
The OFT is expected to report on retailers’ compliance with the much-maligned code at the end of this month. Officials will also respond to calls for a new investigation into the food retail market and whether the major multiples hold too much power following aggressive acquisitions of smaller rivals.
Suppliers said the carve-up of Safeway had also added to a tougher-than-ever trading environment, with Waitrose and Morrisons also said to be expecting better prices after acquiring Safeway stores.
One supplier said: “It’s not as if the pie has got any bigger, yet Somerfield and co are all leveraging these acquisitions as if there is suddenly a huge new opportunity.”
Sir Don Curry, who chaired the influential Commission on the Future of Farming and Food, said: “This is a defining time for this industry. Whatever the OFT uncovers, there is a need to reassess how we can improve relationships in the food chain.”
The Grocer News Team