Asda allegedly used “aggressive tactics” to demand suppliers to pay significant sums of money or face being de-listed, a new report has revealed.
The Groceries Code Adjudicator (GCA) investigation by adjudicator Christine Tacon led to “Project Renewal”, which was implemented by Asda in early 2016 and featured demands for price reductions with suppliers.
Most suppliers were given as little as 24 hours to agree to the changes, while one supplier was only given overnight, and they were threatened with being de-listed if they did not agree with demands made.
The GCA report added that suppliers were being asked for up to 25 per cent of the annual turnover of the stock keeping unit.
“If they were not successful in negotiating terms on which to remain listed, some reported being given non-negotiable periods of notice of de-listing, with periods of between four and eight weeks being reported to the GCA,” Tacon said.
The investigation also criticised Asda’s use of a third party firm to identify cost savings.
“Providing incentives to third parties to generate income or cost savings for the retailer may encourage behaviour inconsistent with [Groceries Supply Code of Practice] code compliance and the retailer’s values,” Tacon said.
The GCA said although Project Renewal was not conducted in a ‘wholly code-compliant way’, it would not be launching a formal investigation into Asda’s behaviour as the grocer had “proactively engaged with suppliers to rectify any lump sum arrangements, which should not have been made”.
Asda code compliance officer Sarah Dickson said the grocer took its responsibilities seriously.
She said buyers were given new training and it had stressed a commitment to full compliance with the Groceries Supply Code of Practice.
“We have also reduced our payment terms for small suppliers to 14 days and our larger suppliers are testing good faith receiving,” she added.
Dickson also urged suppliers to raise any concerns they had with her.