Major supermarket chains need to improve supplier conduct: study

A survey of suppliers assessing the compliance of major supermarket chains with the Food and Grocery Code of Conduct has found that significant room for improvement remains.

The Australian Food and Grocery Council (AFGC) survey of its members found that Coles rated “consistently well” or “mostly” compliant with the code 76.5 per cent of the time, compared with 45.1 per cent for ALDI and 41.2 per cent for Woolworths.

The voluntary code governs certain conduct by grocery retailers and wholesalers in their dealings with suppliers. It has rules relating to grocery supply agreements, payments, termination of agreements, dispute resolution and a range of other matters.

“It’s clear that suppliers appreciate the significance of the code, which aims to improve trading relationships by requiring more certainty and transparency in retailer-supplier trading relations,” AFGC CEO Gary Dawson said.

“The major supermarket chains Woolworths, Coles and ALDI have all voluntarily signed up to the code and the past year has been a transition year in which they have been required to make their trading terms code compliant. The survey results have been provided to the retailers and we’ve had constructive follow-up discussions on the issues raised and ways of improving code compliance, including training of staff, clarity and consistency in new code-compliant supplier terms, and practices that are still causing concern.”

Continuing code-related issues being raised by suppliers include:

  • Criteria for range reviews and delisting of products.
  • Requests to suppliers for payments to make up shortfalls in retailer profits.
  • Payment terms.
  • Progress on new grocery supply agreements.