Supermarket shelves (Photo credit: Wikipedia)
Who holds ‘power’ in the supplier-channel-customer relationship is as old as Marketing itself (see modules 9, 10 and 12 of the Marketing Channels course). But it seems that despite a long a bitter recession, UK supermarkets are still squeezing every last drop from their suppliers in a bid to maintain market share, profits and keep their shareholders happy.
This is particularly hard on small scale suppliers who are scared to complain for fear of committing ‘commercial suicide’. Such tactics, allegedly, include changing terms after agreements have been struck and making some pay for in store promotions, leading to claims by the Grocery Market Action Group that some 3000 farmers and small scale businesses have gone out of business to alleged bullying and sharp practice.
Some dairy farmers have complained they make only one penny per pint of milk more than in 1997 and some pig farmers claim they have been forced to sell animals at a loss of £10 to £30 since August 2010.
So what’s to be done? To the rescue none other than UK Business Secretary Vince Cable who wants to redress the balance with the Groceries Code Adjudicator Bill which will give the right to suppliers, both in the UK and abroad, to act as anonymous whistle-blowers. An independent adjudicator will have the powers to fine errant supermarkets, name and shame them and clamp down on retailers who fail to pay suppliers on time.
The catch? Well it will only apply to grocery retailers with a turnover of £1 billion or more, and, according to the British Retail Consortium, it will probably lead to higher food prices and an added administrative burden.
Will David ever be able to tame Goliath? What do you think?