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Christine Tacon, Groceries Code Adjudicator shared the highlights of her latest survey

By Jonathan Kittow on 01/06/20 14:25 |

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As we enter our 9th week of lockdown some suppliers are gradually reducing the rationalisation of their ranges, while those on the core growth categories (those that feature heavily in cooking, snacking and home baking) are still fully rationalised due to the continued high volumes, although demand is generally starting to settle down.

Impulse, takeaway and single pack consumption is increasing, as meal deal sales return, albeit from a low base with sales still c30% below previous levels, in response to the weather and half term, but the trend is likely to continue to increase as the lockdown eases. Service levels in general, have continued to improve, although not to expected levels, as sku level demand signals are still unpredictable, as retailers and suppliers seek to de-cypher the new consumption patterns and behaviours. On-line customers suffer from weaker forecasts and Amazon in particular, compounds this with booking, in-take and poor communication challenges.

We also welcomed Christine Tacon, Groceries Code Adjudicator, to the meeting to share the key points arising from the recent GCA survey (details available on the Teams channel). She a

lso shared her advice to suppliers on how to work with retailers during the COVID-19 crisis to ensure they protect themselves from any potential breaches of the code. 

One of the emerging points of discussion was the challenge of the cost to serve for the ‘new normal’ which is increasing for many retailers, especially those increasing on-line sales from stores; protecting margin will affect all retailers and inevitably suppliers. With lower disposable income for consumers, the pressure will increase to drive efficiencies, reduce costs and seek greater margins from branded products in particular, whilst brands will seek to secure market share as consumers switch to potentially lower cost own label and alternatives. Advice from the GCA is that it is essential that suppliers ensure they open discussion early about any issues relating to variation to supply agreements.

Either way, with Brexit also looming, it will swiftly become necessary for suppliers to understand the implication of these channel and customer changes on their own cost to serve and take action to manage their costs still more tightly.

The main GCA highlights were:

  • Christine Tacon has extended her stay in office to October to help through COVID period to ensure continued supply and communication between retailers and suppliers. Code remains fully enforced.
  • 2020 Survey results starting to come out, with specific examples of code non-compliance or breaches sitting at 36% code related issues, down from 41% last year.
  • Key issues remain around forecasting and lack of compensation for inaccurate data or delay in payments.
  • 47% of suppliers say they have received code training, meaning 53% have not – Christine Tacon urging all to get trained
  • The GCA Statutory Review to assess efficacy and further need for legislation, is awaiting publication.
  • Key links to information to help suppliers help themselves on the GCA Website

Thank you to Christine for joining the meeting this week and sharing her insights. Featuring on the agenda for the weeks ahead:

10th June – Robert Hardy, Brexit advisor, testing plans and data for new customs documentation requirements

24th June - Andy Coe, Retail Insight UK, an external perspective on how retailer and shopper behaviours are developing

JOIN THE VIRTUAL COLLABORATION GROUP  CLICK HERE

All grocery suppliers are welcome. 

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