With inflation increasing ingredient costs, many suppliers to the major grocery retailers are having difficult conversations trying to pass on these price rises.
Mark White, the Groceries Code Adjudicator (GCA), has just asked suppliers to contact him where the major retailers have not handled a request for price increases appropriately and in particular where the retailer alleges that the Code requires suppliers to give fixed notice of any cost price increase (CPI), which is not true.
The GCA has identified seven ‘golden rules’ where retailers have dealt with CPI requests well:
1. Clear communication from the outset by retailers about the process and how long it will take;
2. Awareness, and prioritisation, of the possible greater impact on smaller suppliers;
3. Support for buyers from colleagues who have experience of dealing with CPI requests;
4. Only asking for the specific information from suppliers that is needed to make a CPI decision;
5. Clear communication of the outcome, so there can be no grey areas;
6. No automatic delists or fixed delist notice periods following CPI negotiations;
7, Reminding buyers about abiding by competition law e.g. never asking suppliers about other retailers’ plans or retail prices.
Suppliers are also encouraged to complete the GCA annual survey before the 27 Feb providing information on their experiences. These comments help the GCA to require buyers to have the correct training and support for the role they are carrying out. This is especially important when buyers move across product categories since the pressures on food businesses are very different to those specialising in cosmetics or household products.
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