aldi store

Aldi has seen its rating from suppliers in the Groceries Code Adjudicator’s annual survey crash for the first time, coinciding with its breakthrough into the supermarket top four.

Having topped the YouGov table for eight of the past 10 years, the discounter fell to a comparatively lowly seventh out of 14 retailers in this year’s survey, released today.

It is understood the supermarket has struggled to maintain the same level of relations with suppliers as it seeks to continue building its market share against the traditional supermarket giants. It saw particular issues in fresh produce.

Meanwhile Tesco, which last year finished second and has steadily improved its performance since the GSCOP poll came in, also saw its position fall, coming in sixth. The survey cut-off point preceded its bombshell call for suppliers to pay fulfilment fees for using its online and Booker wholesale services.

“Having strong partnerships with suppliers is really important to us and we are pleased that 95% of suppliers recognise that we are compliant with GSCOP,” said a Tesco spokeswoman. ”We continue to work collaboratively and listen to their feedback as part of our partnership approach”.

Although 95% of suppliers said both Aldi and Tesco adhered to the code consistently or mostly, this year they were left trailing by M&S, which came top of the table for the first time with a record score of 99%, having finished third last year.

Fellow premium retailer Waitrose came second, followed by B&M and Sainsbury’s.

Aldi strongly defended its performance, pointing out it still achieved the highest score for consistently applying the code in negotiations. 

“The support and loyalty of our suppliers plays a key part in our growth and success, so we are pleased that they rate Aldi as the leading retailer for fair trading relationships, just as they have every year for the past decade,” said an Aldi spokesman.

“Nonetheless, we recognise that now is a difficult time for many suppliers and we are committed to continuing to make further improvements in the way we work with our valued suppliers.”

However, sources said Aldi’s rise to the top four had meant it faced fresh challenges to keep suppliers happy, having been seen as a challenger brand traditionally, despite its growing influence.

Along with other supermarkets it has faced challenges to maintain availability, while in February it outsourced some of the decision-making for its buying to a global sourcing division based in Salzburg.

The Grocer understands there have also been implementation challenges with its new IT system, Ahead, though longer-term Aldi has insisted this would improve efficiency and availability.

Ged Futter, founder of The Retail Mind said it was “very concerning” to see the UK’s ”two most influential retailers” both falling well down the GCA table.

Adjudicator Mark White said it was “encouraging” to see 12 of the 13 retailers from the 2022 survey this year improve their scores, despite the continuing challenges to relationships caused by inflation.

Last year the survey showed overall relations between supermarkets and suppliers fall backwards for the first time since it began.

However, this year’s survey is also notable for the poor performance of online giant Amazon, which was included for the first time since it began being policed by the Adjudicator in March last year.

Amazon Fresh Ealing

Amazon was included for the first time

Amazon trailing

Nearly 12% of suppliers who responded said Amazon “never” complied with the code, while a further 30% said it rarely did.

Its overall score of less than 60% compliance compares with an average of 77% among supermarkets when the survey began in 2014, since when there have been major improvements by supermarkets across the board.

White said there was “no excuse “ for Amazon’s poor showing and said he was willing to use “everything in his power” to ensure it improved its dealings with suppliers.

An Amazon spokesman said: “It is clear from these survey results there is more to do, and we are committed to listening to our suppliers and making further improvements.

“But we are proud of the opportunities we create for suppliers of all sizes, in particular for the thousands of small, independent businesses who can quickly and easily reach customers across the UK and around the world.”

White said the survey had again been dominated by inflation, with 28% of suppliers who responded reported a refusal to consider a CPI or an unreasonable delay in reaching a decision on a CPI request, up from 26% last year.

“For the second year running, some of the retailers have struggled with the high volumes of CPI requests being received, which may have contributed to both how they respond to the requests and other issues such as invoice discrepancies due to pricing errors,” he said.

“I am working with retailers to ensure they address these issues promptly, to decrease the burden on suppliers.

“I will also be watching closely to see how retailers respond to any changing patterns of inflation and how they manage cost price decreases.

“I urge suppliers to confidentially report all code-related issues they experience so I can raise them confidentially with retailers and ensure necessary action is taken swiftly.”

Meanwhile, White told The Grocer he was expecting further challenges for the code as supermarkets tried to put pressure on suppliers to reduce prices as inflation moved away from its peak.

“We will inevitably get to a situation were cost prices start to fall and I will be looking at retailer demands for cost price decreases to ensure that the same principles are applied on the way down as on the way up,” he told The Grocer. 

“I want to hear from suppliers who have concerns over retailer processes.”