How retailers handle negotiations around cost price decreases is one of the priorities in the year ahead for groceries code adjudicator (GCA) Mark White.
Speaking at the GCA’s annual conference in September, Mr White called for all retailers who have to comply with the groceries supply code of practice to apply the same principles behind the GCA’s ‘seven golden rules’ for cost price increase (CPI) discussions to the cost price decrease requests some suppliers are now encountering. These rules include clear communication about the process and the outcome; awareness of the possible greater impact on smaller suppliers; and only asking for the specific information from suppliers that buyers need to make a decision.
Results from the YouGov ‘deep-dive’ interviews with a sample of suppliers, commissioned by the GCA following its annual survey and released at the conference, found relationships between suppliers and buyers are under continued strain as a result of buyers pushing back against price increases.
Research director Jerry Latter said 2022/23 seemed to be a particularly combative year. “The avoidance techniques were out in force and retailers seem to have found new ways to waste time and obfuscate,” he said.
He said cost price increases are taking longer to push through and smaller proportions of the requested amount are being accepted. Some suppliers felt retailers have attempted to avoid entering into CPI conversations entirely. Others are now being approached with cost price decrease requests, with retailers citing deflation as the reason.