Just days after the Groceries Code Adjudicator launched an investigation into Tesco’s supplier relationships, reports over the weekend have revealed that the supermarket group is still demanding that suppliers cut prices to reflect the falling price of raw materials or face being taken off the shelves if they refuse to comply.

According to emails seen by the Sunday Times, suppliers are being sent an analysis of raw material costs which conclude with a demand for a price reduction. It has been reported in recent months that Tesco is renegotiating its deals with thousands of suppliers as part of efforts to improve its competitiveness and this latest report suggests that it is still be demanding cuts from some. Those suppliers that have refused to reduce prices have reportedly received a reply from the retailer that it would review whether it would continue stocking their products. One supplier said Tesco had asked for a 10% price cut and that other supermarkets had not made such demands.

A Tesco spokesman responded, saying: “We work with over 3,000 suppliers across the UK and hold regular discussions with them on how to provide the best products and great value for customers.”

Tesco’s new Chief Executive Dave Lewis has vowed to improve its relationships with suppliers in the wake of last year’s accounting scandal. Groceries Code Adjudicator (GCA) Christine Tacon last week launched a review into Tesco's practices amid concerns that the retailer has breached the Groceries Supply Code of Practice. She took the decision after considering information submitted to her relating to practices associated with the profit over-statement. Tacon has discussed the practices with Tesco and is now calling more evidence from direct suppliers and others to determine what further action to take.  The investigation will particularly focus on delays in payments.

However, a recent survey by the GCA has shown that the suppliers are reluctant to complain of bullying by supermarket buyers out for fear of reprisals, making it difficult to gather evidence. The data published in The Guardian shows only 45 of 128 suppliers approached responded to the survey, which sought to establish how they were faring under the new regulatory regime. The majority of those said they did not think retailers had changed their practices in the past six months.

Nearly half of those who responded said they had suffered incorrect deductions from invoices, the most common complaint. The next most frequent problem, experienced by 44% of respondents, was a disputed demand for charges, which could be backdated for up to six years, or for a lump sum payment higher than previously agreed…for more, see The Guardian website
 

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