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Supermarkets’ power causing ‘distress’ to suppliersstevenkiernan, 13 August 2007Be the first to comment on this article The Competition Commission should change the focus of its grocery market investigation to look at supermarkets’ impact on recently delisted companies and those that have gone out of business, according to accountancy firm Grant Thornton. Duncan Swift, head of Grant Thornton's food and agribusiness recovery group, said that despite the investigation, there were still no solutions to the "major financial distress" caused by supermarkets' power. "If not stopped, it will continue to cause market distortions that will ultimately impact on the consumer," he said. Part of the problem of researching the grocery market is suppliers' unwillingness to speak out, and packaging companies have also been reluctant to come forward to take part in the Competition Commission (CC) investigation. Only 50 of 1,500 companies approached by Grant Thornton responded to its survey. The research showed that "unreasonable practices" were putting financial strain on suppliers and more than 40% of those surveyed said they felt supermarkets would be to blame for future closures. Almost two-thirds of suppliers do not have formal contracts with retailers, which can lead to orders being reduced or cancelled with short notice and without compensation. However, Swift said this had become endemic to the industry and some suppliers were "adopting supermarket tactics" to avoid contracts with companies that supply them. "It's no way to support enterprise and develop what is an important industry to the UK economy," he added. The CC is due to publish the provisional findings from its investigation in September. Speak Your Mind |
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