Food for thought in quest for retail code
A code to promote fairness in how grocery retailers deal with suppliers is to have its final hearing tomorrow
The final hearings in a protracted process aimed at introducing a code of conduct for grocery retailers accused of manipulative dealings with suppliers will take place tomorrow. In a consumer society where supermarket shelf-space is so often the oxygen of a food business, many claim to be at the mercy of punitive deals that make them shoulder the greater financial risk.
There are several examples of how this works but suppliers, who fear being “delisted”, or excluded from the shelves, are reluctant to discuss them openly.
And yet retrospective price increases on LTAs (long-term agreements) and other devices to help stymie supermarket losses are the sector’s worst-kept secrets.
Some suppliers say they must help pay for wastage and marketing; others that they are left with no choice but to agree to in-store specials on products even where the retailer maintains its margin and so incurs less loss as a result of its own promotion.
A voluntary code of conduct for retailers has now passed its sell-by-date; in its place, proposed statutory regulations will control how such deals are done in the future.
Suppliers will welcome clarity while retailers will lament an era of unbridled competitive practice which they see as crucial to a viable industry supporting employment.
The Department of Jobs, Enterprise and Innovation says the issue has been a matter of debate across Europe but “at national level, the Programme for Government includes a commitment to enact legislation to regulate certain practices in the grocery goods sector”.
A forthcoming bill designed to merge the National Consumer Agency (NCA) and Competition Authority is to include an “enabling provision” that will allow these regulations, which have already been drafted and published, to be tackled. It is expected by September. It aims to “strike a fair balance between the competing interests of the various stakeholders” in the groceries sector, and the consumer.
Meanwhile, the Oireachtas Committee on Agriculture, Food and the Marine is considering the submissions of key industry players and will then come to its own conclusion, probably in the autumn. It is expected to support a statutory code.
So far the committee has heard from a number of supermarkets, the representative organisations RGData and Retail Ireland, the Irish Farmers Association (IFA), suppliers lobby Food and Drink Industry Ireland (FDII) and several organisations representing the milk sector.
Final submissions will be taken tomorrow from the Competition Authority and the NCA.
Committee chairman Deputy Andrew Doyle acknowledges concerns over a “trend where the dominant retailers are in a position to keep favourable terms for themselves at everyone else’s expense”.
“There has been evidence, in one case recently, where suppliers were being asked to give money to cover loss and damage when that is already meant to be worked into the contract,” he says. “Ultimately the motto is fair trade.”
But there are those who remain opposed. Retail Ireland, the Ibec-affiliated representative body with some 3,000 shops including supermarkets, told a committee hearing last March that the debate must be set against a background of “depressed consumer demand” and job losses–- since 2008 there have been over 50,000 and plenty of businesses have closed.