Any other business

Tesco tops list of supplier complaints, but is improving under Dave Lewis

4 min read

23 June 2015

The UK's biggest supermarket has been rated the worst of the big four grocery retailers at complying with government-backed industry guidelines designed to protect manufacturers.

Some 30 per cent of Tesco’s direct suppliers said the supermarket rarely complied with the code, while four out of 100 said it never complied with the code of practice.

The confidential survey of over 1,000 supermarket suppliers was conducted by YouGov on behalf of the industry watchdog, the Groceries Code Adjudicator.

It found that Tesco and Iceland were ranked as the worst of the major retailers – 35 per cent of suppliers said that Iceland rarely or never complied with the code. Morrisons didn’t fare much better, with 32 per cent of its suppliers stating the same.

More than half of all issues raised by suppliers in 2014 were regarding Tesco, followed by Morrisons with 26 per cent. While Tesco is the UK’s biggest retailer, with nearly 30 per cent of all grocery spending, the result still indicated that more than one in ten (11 per cent) of Tesco’s suppliers raised a complaint in the past year.

Chief executive Dave Lewis joined the supermarket in 2014 after it weathered a troubled year, capped off by pre-tax losses of £6.4bn – the biggest annual loss in history. When the results were announced in April, he refused to blame past management, saying it wasn’t for him “to talk about the history and I don’t see any benefit in doing that”.

“I’ve learnt you don’t make an assessment of somebody else’s situation that you weren’t in,” he added.

Despite this demurral, Christine Tacon, who leads the GCA, said Tesco had made a “big improvement” under Lewis (who goes by the nickname Drastic Dave), as the supplier complaints were down on last year.

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In 2014, 41 per cent of Tesco suppliers said the company rarely or never complied with the code, but this has fallen to 34 per cent. The total proportion of suppliers experiencing potential breaches of the code fell from 79 per cent to 70 per cent.

Lewis has been reducing the ways in which Tesco charges suppliers from 24 to three, as the watchdog investigates the supermarket regarding its dealings with manufacturers and distributors after the £263m accounting scandal – linked to misstatement of income from such suppliers.

Tacon acknowledged there was still significant progress to be made “in important areas, but this is a clear sign we are on the right track”.

She suggested that awareness had been an issue before, but suppliers were becoming more aware of the GCA and its work “and fewer now believe the GCA will not be able to do anything if they bring an issue to me”.

In a statement, Tesco said that suppliers were “at the heart of our business and we’ve been working collaboratively with them to change the way in which we work”.

“Since 2013, we have taken action to strengthen our compliance processes and have established a dedicated supplier helpline in the UK,” it added.

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