Food fight in Aisle 3: Grocers, suppliers clash over need for code of conduct in Canada

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A fair practice rulebook for the grocery industry has worked in other jurisdictions but here it’s a political hot potato

“They’re just digging in, which is really too bad,” FCPC chief executive Michael Graydon said this week, though he added later that some of his members have found Walmart willing to provide “something in return” for the higher fees, including extra orders.

In Canada’s consolidated grocery market, suppliers say they have little choice but to accept what they believe is unfair treatment, including late payments, exorbitant listing fees to get product on shelves and fines for little delivery mishaps, unexplained charges and extended promotions on products that suppliers didn’t agree to, but still have to pay for.

Representatives for suppliers say the grocery code of conduct would enforce fair business practices, but grocery reps say a code would lead to higher prices for consumers.“If margins are going to be increased — and it seems that a lot of their focus is on margins — then either grocery margins will be squeezed or consumers will pay more,” RCC spokesperson Karl Littler said.Article content continued

All this arguing sounds familiar to Paul Dobson, a professor of business strategy and public policy at the University of East Anglia in Norwich, England, who studies food retail competition and consumer policy in the U.K.Article content continued The U.K. code, overseen by an adjudicator, requires that retailer-supplier agreements be laid out in writing, and that retailers pay on time and give advance notice if products will be dropped or orders reduced. The code also stopped certain penalties being placed on suppliers, including policies that forced suppliers to compensate stores for when products spoiled or went missing.

A survey by the Grocery Code Adjudicator’s office, which enforces the code, found that 36 per cent of U.K. suppliers reported compliance-related issues with retailers, a big improvement from 2014, the first year of the survey, when 79 per cent of suppliers had issues. “ has reduced, to some extent, the power imbalance. It has derived a more equitable, mutually beneficial relationship between supermarkets and suppliers. But it certainly hasn’t increased prices to the consumer.”Article content continued

“They’re certainly doing their homework,” he said, adding that he and two of his major manufacturing members met with Agriculture Minister Marie-Claude Bibeau this week. “COVID had a lot to do with changing the opinions.”

 

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Walmart contracts the business, the supplier makes big investments to serve their largest customer. Then Walmart has them by the throat. To give up the Walmart business now = sure bankruptcy. This is planned and executed abuse of dominant position.

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