Food and grocery suppliers have complained about slow price hike deals
For the first time, Woolworths, Coles, Aldi and Metcash have been ranked on how they treat food and grocery suppliers with the German-owned giant taking out top spot.
For the first time, Woolworths, Coles, Aldi and Metcash have been publicly ranked on how they treat food and grocery suppliers with the German-owner giant taking out top spot.
The findings into the behaviour of the supermarket giants and how they treat their food and grocery suppliers has been released on Thursday by the independent reviewer of the Food and Grocery Code of Conduct, Chris Leptos, in his annual report on the regime.
The report has released an interactive dashboard for the first time, that provides access to all the survey areas and ranks the performance of Code signatories - Woolworths, Coles, Aldi and Metcash - based on responses from their suppliers.
And while Aldi has been ranked in the top position for its treatment of suppliers, it did come in for some criticism over the length of time it took to negotiate price rises with those food and grocery suppliers just at a time when manufacturers were desperately trying to cover their rising costs driven by inflationary pressures.
While food and grocery suppliers did not make any formal complaints about their treatment by supermarket giants Woolworths, Coles, Aldi and Metcash in 2023, the traditional grumbles of not agreeing to price hikes in a timely manner, late payments, deducting payments without consent and being required to fund promotions from their own pockets remained.
As part of the supplier feedback process collected by Mr Leptos there was a rise in the proportion of the nation’s supermarket suppliers who complained about deductions made to invoices and remittances without their consent, led by Aldi and Coles.
Aldi also attracted the most complaints about this contentious unauthorised payment issue.
The increase in the proportion of suppliers reporting “deductions off invoice/remittance without consent” from 5 per cent to 7 per cent since last year’s survey aligns with the Independent Reviewer’s experience over the past financial year, Mr Leptos said.
“Specifically, multiple suppliers came forward informally noting their respective signatories had engaged in this behaviour,” he said.
“Aldi and Coles had an increasing share of suppliers, while Woolworths and Metcash had a decreasing share of suppliers reporting this behaviour.”
Aldi, owned by the reclusive Albrecht family in Germany and which has a market share of around 15 per cent of the $120bn supermarket sector, also was a focus for complaints among suppliers over 2023 for the lengthy time it took those suppliers to negotiate price rises for their products.
In the main it was a positive report on the behaviour of the supermarket chains, although problems around late payments, drawn out price negotiations and requirements to fund in-store promotions and discounts remained a bugbear.
“I am pleased to report that the Code signatories responded constructively to my concerns, and in most cases undertook to investigate or rectify matters raised by their suppliers,” Mr Leptos wrote in his annual report.
The Code signatories include Woolworths, Coles, Aldi and Metcash with each supermarket also employing an independent arbiter to handle complaints of suppliers, which are kept confidential so as not to potentially harm business interests of the suppliers or give suppliers confidence they can make anonymous complaints.
In 2023 there were no formal complaints made to Mr Leptos, down from two complaints in 2022 and three in 2021.
However, some suppliers looked to have made more informal approaches to Mr Leptos, who is the former managing partner, government, of EY and a one-time senior partner with KPMG, to raise some issues over their treatment by the supermarkets.
“I did not receive any requests to review a complaint handled by the Code arbiters in 2022 – 23 reporting period. However, I continue to receive direct approaches from suppliers where they are reluctant to formalise a complaint.”
In his annual report Mr Leptos details a supplier survey where 279 food and grocery suppliers responded.
Overall responses to the survey questions indicated that most suppliers have had fair dealings with their respective retailer/wholesaler.
The time it took to pass through price rises was a major grumble among suppliers with Aldi dragging out its negotiations with food and grocery suppliers.
“One discrepancy I have noted is the difference between the time reported by Code arbiters to negotiate price requests and responses to my survey. Namely, while Aldi’s Code arbiter has reported none of the negotiations exceeded 30-days, 48 per cent of respondents that entered a price rise negotiation with Aldi reported that the length of these negotiations exceeded 30 days,” Mr Leptos wrote in his report.
Meanwhile, Mr Leptos’s report found that 47 per cent of those surveyed indicated that they were always treated fairly and respectfully by their retailer/wholesale, 39 per cent identified that their retailer/wholesaler mostly treated them fairly and respectfully and 12 per cent identified that their retailer/wholesaler acted unreasonably at times
Only 2 per cent identified that their retailer/wholesaler frequently acts unreasonable or with duress.
For Coles and Metcash, a higher proportion of suppliers indicated that they were “mostly” rather than “always” treated fairly and respectfully.
For Aldi and Woolworths, “always treats me fairly and respectfully” received the highest share of responses.
Consistent with results from the past two years, Aldi has the highest proportion of suppliers reporting they are “always treated fairly and respectfully”, the annual report found.
The key issue reported by Woolworths suppliers was being “required to fund promotions despite it being unreasonable in the circumstances”.
Meanwhile, the number of Coles suppliers citing “delisting without genuine commercial reason” was an issue experienced to a greater degree than other signatory suppliers. Compared with other signatories, a higher proportion of Aldi suppliers cited the most prominent issue as being “deductions off invoice/remittance without consent”.
A spokesman for Woolworths said the supermarket welcomed the release of this year’s report as it is one of a number of sources of feedback it drew on to monitor the health of its trade partner relationships.
“It follows on from constructive dialogue with Mr Leptos this year as well as the work of our highly regarded Code arbiter, Helen McKenzie.”
“We are committed to investigating and resolving any supplier complaints fairly and expeditiously.”
A spokesman for Coles said it would continue to work hard to build and maintain strong, trusted relationships with suppliers.
“Ongoing feedback and engagement are important to us, and we are reviewing the report closely. We conduct our own surveys and bimonthly pulse checks with our suppliers, which give us real-time feedback of where we need to focus.
“We continue to enhance our processes, host regular forums and maintain an active dialogue with our suppliers.”
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