Grocery wholesaler Metcash, which supplies thousands of independent supermarkets under banners such as IGA and Foodland, has conceded it “still has work to do” in gaining the trust of its own grocery suppliers, pledging to expand the frame of reference for its supermarket code arbiter.
In a letter to independent reviewer of the Food and Grocery Code of Conduct, Chris Leptos, Metcash Food chief executive Scott Marshall said the supermarkets wholesaler had made significant progress in training its buying teams, putting code compliant trading agreements in place with suppliers, and updating Metcash policies and procedures to ensure it acted according to the requirements of the code.
It follows Mr Leptos’ recent meetings with Woolworths, Coles and Aldi to discuss supplier concerns amid the highly volatile economic climate.
He also conducted a survey of suppliers to gauge their views on the behaviour of the supermarkets they trade with, how they have been treated and the workings of the code.
Mr Marshall conceded in a follow-up letter to Mr Leptos last week that there was still work to be done.
Metcash is a recent signatory to the supermarket code of conduct, which has governed the industry since 2015 and oversees the fair treatment of suppliers.
“We were pleased to see acknowledgment in the survey results of our work in managing cost changes – a key pain point for suppliers in the industry – but we also recognise that we still have work to do to achieve our objective of being a trusted partner, easy to do business with, and delivering the best route to market for every supplier to the network of independent businesses Metcash food and grocery supplies,” Mr Marshall wrote.
The wholesaler has encouraged suppliers to raise concerns with trade executives and to escalate any concerns to Grant Ramage, executive general manager for merchandise at Metcash.
“However, we do understand that not all suppliers feel able to do so.”
Metcash has discussed the matter with its own independent Food and Grocery Code Arbiter, Martin Shakinovsky, and decided to expand his role and profile to improve interactions with suppliers.
The arbiter’s expanded frame of reference will allow matters of concern to be discussed on a confidential basis, even if the supplier elects not to make a formal complaint under the code.
“It is our hope that this provides another mechanism for suppliers to provide feedback, and an ‘early warning’ for us on any emerging patterns of behaviour or practices that are out of step with the Code so that they can be corrected quickly.”
Metcash has also agreed to update its supplier portal to increase Mr Shakinovsky’s profile with suppliers, making the links to contact him more prominent and expressly noting his expanded frame of reference, as well as raising his profile at supplier events.
While Woolworths, Coles and Aldi signed up to the Food and Grocery Code when it was launched in 2015, there was early resistance from Metcash as it saw itself as a wholesaler rather than a retailer like the other supermarket chains.
The code was brought in to help stamp out improper and harmful behaviour against suppliers, which often have less bargaining power when dealing with the major supermarket chains.
Metcash finally agreed to be bound by the code in 2020.
Following last month’s review into the code’s workings and the supplier survey by Mr Leptos, Coles agreed to review how it deals with inflation-based requests for price rises.
A major focus of the review is how suppliers will prove to Coles the size and scope of their own cost increases without compromising commercially-sensitive information.
Woolworths pledged to improve its process for reviewing cost price increase requests from suppliers.
Extracted from The Australian