On the rocks: Inflation puts pressure on grocers’ relationships with suppliers
Tensions are escalating between the country’s retailers and their suppliers, according to research on behalf of the independent groceries regulator.
Just over a quarter (26 per cent) of suppliers said they had experienced being refused by a retailer to consider a request for a cost price increase or an unreasonable delay in concluding such a request.
In the industry survey by the Groceries Code Adjudicator (GCA) eight in ten suppliers had asked for at least one price increase in the past 12 months.
After two years of the pandemic when retailers and suppliers united and worked closely together, inflationary pressures have resulted in souring relationships.
Strained relationships have led to Code-related issues. The YouGov survey showed a fall in the number of suppliers not facing any Code-related issues from 56 per cent in 2021 to 47 per cent in 2022.
Eight grocers saw the score granted to them by suppliers drop while Aldi scored the best, scoring 98 per cent among suppliers. Five retailers either improved or maintained their score.
Head of the regulator, Mark White, said he was concerned pressure had impaired relationships and “created wider problems.”
“Inflation has affected the entire groceries sector as witnessed by the sheer scale of requests from suppliers to increase prices,” he said.
Moving forward, the adjudicator said his priority was to collaborate with all retailers to “ensure they treat their suppliers fairly as they navigate the cost price process during this difficult time.”
“It is also important that suppliers confidentially report any issues they have so I can take them up swiftly with the retailers,” White added.
Supermarkets and grocers have been hit with a cocktail of challenges in recent months including hiked energy, raw material and packaging costs. This has come alongside supply chain shortages, with the food supply chain struggling with shortages of fruit pickers and delivery drivers in the past year and a half.
More than one in 10 suppliers mentioned delays with receiving payment or retailers withholding pay when there were disagreements over deliveries, up from eight per cent in 2021.