Co-op Group has introduced strict minimum thresholds that stop claims on low-value missing stock for Southern Co-op’s franchisees, The Grocer can reveal.
In communications sent to retailers, which operate under the Welcome fascia, the new claims process was implemented on 1 July. It states they can no longer be compensated for cases of missing stock worth a retail value under £90.
This means individual cases of missing or damaged stock can only be claimed for if they exceed £90 or if a case is more than 50% damaged.
Instead, they now receive a 0.1% credit on bills to compensate for the removal of low-value claims, which franchisees have argued is not enough to cover their losses.
It is understood the new claims criteria aligns with those for other Federal Retail Trading Services (FRTS) customers. FRTS is the buying group for the UK’s 12 retail co‑op societies, which is managed by The Co-op Group.
The internal communications confirmed claims for full cages that are either missing or unusable can be made, as well as totes of missing tobacco.
Franchisees have raised concerns over the “significant impact” these changes have had on their businesses financially, labelling the new criteria as “unethical” and “impossible to meet”.
The Grocer also understands Co-op Group has proposed lowering their weekly delivery frequencies. Retailers who exceed these new caps will be charged a 3p fee per case. These changes are expected to come into effect next year.
Franchisees have warned that accepting larger bulk delivery volumes will overwhelm backroom storage space and put short-life chilled lines at risk of expiry before they hit shelves.
Co-op Group has stated that the claims changes are not connected to the merger with Southern Co-op, and that they had been planned and implemented before the society completed the transfer of engagements into Co-op Group on 27 July.
The Grocer understands that Co-op Group notified Southern Co-op, which then informed its franchisees, that it was seeking to harmonise the terms provided to all of its partners.
“For many years we have served our co-operative society partners, including Southern Co-op, and therefore indirectly Southern Co-op’s franchisees,” said a Co-op spokeswoman.
“These changes are part of aligning and standardising our arrangements across all our Co-op partners, to ensure consistency of service for the many co-operative partners that we serve. These changes are not connected to and pre-date the transfer of engagements of Southern Co-op.”
A Southern Co-op spokeswoman added: “We’re aware of concerns raised by some of our franchisees and are working closely with them to understand and help manage the impact of these changes. These updates are unrelated to plans for Southern Co-op and Co-op Group to join forces.”
Following the transfer of engagements, Southern Co-op is now Siena Co-op, which is a wholly owned subsidiary of The Co-op Group. However, the transaction is still awaiting approval from the Competition & Markets Authority, which is expected later this year. Until then, the two businesses continue to operate independently of each other.
The franchise trading changes come as Southern Co-op’s head of franchise Matt Turner is also set to step down from the business from October, with head of store operations Anuj Christi to take over.
No comments yet