This story was originally published. RNZ.co.nz Reposted with permission.
Vendor industry groups say some supermarkets are threatening to “remove” a vendor’s products from their shelves if they talk about tactics such as 45% margin and billing for theft.
The accusations arise as the government ordered supermarkets to conduct a year-long commercial commission market research to ensure that New Zealanders are paying a fair price for their groceries.
The study will review whether there is enough competition in a market dominated by two major supermarket chains, similar to a study on fuels completed by the commission last December.
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The Food and Grocery Council, which represents suppliers, welcomes the study, but says it wants a mandatory industry code of conduct to curb what it calls bad “malicious behavior”.
Vendors are facing major costs, including charges for in-store theft, said Congress’ chief executive Katherine Rich. checkpoint.
“To display products today, you have to give your supermarket a 30 to 45 percent gross margin to get on the shelf,” she said.
“Then the promotion comes with extra costs, shelf costs, merchandising costs. There will be additional claims, rebates, opportunities to earn more. The list is endless.
“I am the most [suppliers] Little or no bargaining power… They must be in a position to set the price. It’s like’taking this out, not supplying it to us, or deleting your product’. “
The code proposed by the Food and Grocery Council will protect suppliers from the threat of pulling products off the shelf, Rich said.
“[Under the code] There should be a commercial basis rather than saying’I don’t like complaining, I will delete the product’ or’If I don’t pay this, I will delete it’. Your product’. In general, deletion is the default tactic.
“In a market structure with two major supermarket teams, getting kicked off the shelf can lead to losses between 45% and 55% of sales, which is very serious.
“For some New Zealand companies, that’s the difference between plant survival and closure, and that’s why we’ve seen so many manufacturing shifts abroad, and that’s why we’re more reliant on imports.”
While most supermarket and vendor relationships have a health culture, at the store level there is evidence that supermarket owners have been bullied.
“Of course no one can complain for fear that it will be deleted, so if you let the grocery vendor discuss about not being able to find someone ready to speak to you, the fear of retaliation is very true.
“The Commercial Council is well aware that most of our suppliers are in a market environment where they do not feel free to speak or fear retaliation.”
Rich said the Food and Grocery Council would provide an anonymous scenario based on the actions he saw.
“I am convinced that the wholesale prices of New Zealand food and grocery manufacturers are fair and reasonable, because fat was removed from the company through these negotiations a few years ago.
“However, margins are still high in New Zealand. Indeed, some industry commentators say that New Zealand and Australia have the most profitable supermarkets in the developed world, and this is because the margin is very high, the difference between revenue and cost commodities.
“Some would say there’s competition. In fact, if you think about where to get laundry powder and other groceries, it’s not.
“So, having the privileged position of the market double point, you have to have additional responsibilities and responsibilities. This is what I will look at in the study and what I think the code will provide.
“There are many food and grocery manufacturers who have to shut down their business or move or close their products overseas for development because we cannot make a normal profit.”
Rich said New Zealand supermarkets have the most concentrated market in the world. That said, I can’t say that it is absolutely a supermarket because there are a few important factors in the New Zealand market.
“We are one of the few countries in the world that imposes GST on food and groceries unlike most countries. We are at the bottom of the world, transporting cargo from here is expensive, and the geography of Japan is very small. So it’s complicated, but that’s all we’ll look at in market research.”
Australia has a code of conduct regarding the relationship between suppliers and supermarkets, but this is voluntary.
Rich said he wanted to see similar code mandated here and overseen by the commercial committee.
“Not all problems will be solved. Feeding the grocery market isn’t for the weak-hearted, but it’s going to make a difference. We’ve ruled out more serious behavior we’ve seen in Australia and the UK overnight.
“Something like forcing a supplier to pay for the theft-this is completely retail cost, and you’re taking a random deduction from the payment because you can. Will bring back your expertise.”
In one example, Rich is checkpoint One store did an inventory check and charged the supplier to pay the difference between the store’s sales and the amount on the shelf.
“Retail theft and all other costs that are genuine retail costs are borne by the retailer. It is unfair to keep returning the costs to the supplier to pay for it at random.
“It’s definitely a business culture that needs to change. Some store owners do their job very well, but there are people who haven’t really received a note.
“I always think sunlight is the best disinfectant. So I’ve been talking openly about this type of behavior. Certainly, when it comes to merchant treatment, it’s better because there are a lot of women going into stores and stacking shelves at most ungodly hours. Be treated and deserve to work in a better grocery culture.
“This is what we are looking for as a result of this market research, and we hope it will lead to a code of grocery conduct.
“In some cases, I think they’re actually shopkeepers who act as if they should see this kind of culture as a badge of honor. Some weren’t even accepted in the last century and certainly not in 2020.”
Rich said that in many cases these operators can be described as harassment.
“There is a store in the Auckland area that doesn’t send reps and merchants because our members think the environment is detrimental to their mental health. What does that mean now?”
Foodstuffs and Countdown requested comment on these accusations, but both declined to be interviewed.
In a statement to RNZ, Antoinette Laird, Head of Corporate Affairs at Foodstuffs, said: “For about 18 months, we have focused on our customer-focused business transformation program. This program puts our customers first, allowing us to predict the future needs of our customers as we hear and respond. Available in today’s marketplace. Rich insight.
“This ensures that our locally owned stores and online merchandise are in good condition to provide New Zealanders with what they need for the future.
“We also work in accordance with our commitment to operating in accordance with reasonable, ethical and sound commercial guidelines, the’Supplier Relationship Charter’. The values of Foodstuffs Cooperative are strong and positive supplier relationships and make every supplier an important business partner. Is regarded as.
“We are committed to working with the Commercial Council to ensure that this research is effective for the benefit of all New Zealanders.”
The countdown spokesman also provided the following written statement: “We work hard every day to make food for our customers at the lowest possible price possible. The New Zealand grocery market is fiercely competitive and it shows that there are many choices. Customers-supermarkets, specialty stores, fruits and vegetables, Shops, butchers, meal subscription services, etc.
“We welcome the opportunity to demonstrate this in an open and transparent way and will work fully with the Commerce and Industry Committee.”
This story was originally published. RNZ.co.nz Reposted with permission.