New challenges ahead for GCA

There was a slight sense of déjà vu at the fifth Groceries Code Adjudicator (GCA) Annual Conference in London on 25th June as Adjudicator Christine Tacon reported good progress by retailers on a number of issues, but added that in other areas there is still work to do.

One of the highlights of the annual conference is the presentation of the results of the annual groceries sector survey, carried out by pollsters YouGov for the GCA. This year the survey, which received over 1,000 responses, put Tesco, Morrisons, Asda and the Co-operative at the top of the improvement table for Code compliance in what the GCA described as ‘a year of strong progress across all regulated retailers.’

Commenting on the survey specifically, Christine said; “My 2018 survey tells a very positive story and it is no coincidence that the four most-improved retailers this year have each faced increased GCA scrutiny and heightened levels of GCA engagement through investigations and case studies.

“Indeed, I am delighted to report significant improvements across all regulated retailers. In each successive GCA survey, suppliers have scored retailers’ compliance with the Code. In 2014, the percentage reported as complying ‘consistently well’ or ‘mostly’ ranged from 58 to 90 per cent. This year, the range is 84 per cent to 97 per cent, with only two retailers scoring less than 90 per cent.

“The 2018 survey is proof that my collaborative, business-focused approach gets results.” This year only four out of ten suppliers reported having experienced a Code-related issue – down from a high of eight out of ten in 2014, and a huge improvement on 2017 when 56 per cent of suppliers reported having experienced an issue.

Opening the conference, Christine explained that part of this ongoing success was due to the way that the GCA had been set up in the first place: “The establishment of the GCA came from a great deal of rigor. I believe that degree of scrutiny is what created the role where I can make a difference. Four years running there has been improvement on all of these issues.”

Her second term of office has seen a shift of focus from systematic issues which continue to blight the supply chain to focus on achieving cultural change with the retailers, something which she believes is already happening. For example, delay in payments was the top issue experienced by suppliers in 2018, but it was reported by only 19 per cent of suppliers, whereas back in 2014 the top five issues were reported by between 33 and 45 per cent of survey respondents.

“The results of the survey together with information I have received from suppliers and trade associations mean there is no pressing candidate for inclusion as a current Top Issue. But this doesn’t mean my job is done, far from it,” said Christine. “I know there are fresh challenges waiting for me. I can confidently say that for two reasons: one is that my current investigation into the Cooperative Group will generate future work with all regulated retailers, although of course I cannot yet know what form that will take. The second is that additional retailers will soon be designated by the Competition and Markets Authority.

“The CMA has told me that it has written to a number of retailers to identify those with a UK annual groceries turnover of more than £1 billion. It expects to designate one or more additional retailers by the end of August. “Bringing these new retailers up to speed and ensuring a consistent level of Code compliance across the entire regulated cohort will be challenging and exciting work. I am looking forward to it very much.”

Who these retailers might be is subject to much speculation, but the definition of ‘groceries,’ which includes items like bin liners, toothpaste and shampoo, suggests that it is more likely to be someone like Boots, Wilko or even Amazon, than the likes of B&Q, which many horticultural suppliers would like to see included in the GCA’s remit.

As Minister for Small Business, Consumers & Corporate Responsibility, Andrew Griffiths MP has a large remit of responsibility, one of which includes the office of the GCA. In his keynote address he congratulated Christine and her team, adding that she is regarded internationally as an exemplary modern regulator. “One of the cornerstones of this success has been Christine’s collaborative approach, keeping everyone in the picture, listening at all times and acting only when necessary,” he stressed. “This is an efficient way to deal with an existing practice which is inconsistent with the Code, and an equally good way to put it right for the future.”

He added that such a collaborative approached worked for both suppliers and retailers and helped to deliver changes much more quickly than more formal mechanisms and reviews might. However, he warned that; “The Code will only continue to work if suppliers are aware of the rights and entitlements that it provides and are confident in exercising them. Following the first statutory review of the GCA Christine launched the ‘Code Confident’ campaign. Its aim is to engage suppliers with the Code, encouraging them to get trained and to speak up to Code Compliance Officers and the GCA.”

The ongoing issue of awareness of, and confidence in, the Code was also something highlighted by YouGov’s Gavin Ellison when he presented more in-depth findings from this year’s GCA annual survey. This showed that as many as 13 per cent of respondents (which were made up of 911 direct suppliers, 113 indirect suppliers and 28 trade associations) were not aware of the GCA, while up to 25 per cent had poor or no understanding of the GCA’s role and responsibilities.

Furthermore, of the 48 per cent of suppliers who said that they would not, or weren’t sure if they would, raise an issue with the GCA, 14 per cent said this was because they did not know if the issue was covered by the Code.

However, while these figures are higher than the GCA would like, it wasn’t all bad news. “Awareness of the GCA has been rising every year,” commented Gavin. “Medium and larger suppliers tend to have more confidence in their own understanding of the GCA and larger suppliers feel more confident about approaching the GCA with issues. This year’s survey showed quite a large increase in those suppliers who have received training, and it is encouraging that there has been a further increase in the number of suppliers who know who their Code Compliance Officer (COO) is.”

There is always much interest in the slides which rank retailers according to their performance in accordance with the Code. In addition to those retailers like Tesco and Morrisons which have shown the greatest improvement from last year, the overall rankings (in response to the question: Are trading relationships conducted in good faith and without duress?) were topped once again by Aldi, followed by Waitrose, Marks & Spencer and Lidl. The worst supplier in this ranking was Iceland, who, along with M&S, had also recorded the smallest improvement in retail practice (just one per cent each over the last twelve months).

Commenting on these results Christine added that the survey told a really positive story: Two retailers have 97 per cent compliance with the Code and only two of them are below 90 per cent, which was the top level of compliance in the 2014 survey. “This squeezing of compliance demonstrates the effect the Code is having, and the four most improved retailers have all been the recipient of an investigation or a case study,” she pointed out. “The level of improvement shown by Tesco and Morrisons is significant; that’s not just about tinkering at the edges.”

As a result, going forward Christine will increase her focus on continuing to get this type of culture change in all the retailers, and that already retail buyers are being retrained in the Code every year.

This was something that was underlined by Morrisons Commercial Director Darren Blackhurst, who shared some of the improvements made by the retailer. “I think the results announced today reinforce the continued progress that we’ve made in our relationships with our supply base, but also that we could still do better.” Describing some of the actions taken over the last three years since he joined the business which had been in decline for a number of years, he added; “We quickly realised that our approach had to change, particularly our approach to our suppliers.

“As with all change it started with listening. The feedback [from our suppliers] was clear. They wanted us to listen to them, to take time to understand their business, as well as communicating our own plans. They wanted us to simplify the way that we worked and to build longer-term relationships, and they wanted us to do what we said we would do.” This feedback has helped shape new ways of working by the business, including ‘twelve ways of working’ which were launched to both suppliers and buyers at the same time.

“We are a business of scale and mistakes do happen,” he admitted. “However, it is how we resolve these issues quickly and responsibly that really makes a difference.” Among the changes are new supply agreements based on joint plans for growth, together with putting buyers at the heart of day-to-day operations.

“To summarise, we’ve made good progress but there is more to do,” concluded Darren, a sentiment which could equally apply to the whole grocery supply chain and its regulation.