Bullying suppliers: the noose tightens…

Australia’s Coles group has reportedly issued a document to its buyers, warning them to work within the rules and not to bully suppliers. The highly unusual move was reported by The Weekly Times, which said it had seen the document, titled ‘Compliance Factsheet - Unconscionable Conduct’ and said to include “threatening to delete or withdraw a product unless a supplier provides greater funding, rebates or discounts than otherwise previously agreed”.

Despite being simply a local level example of government eventually reacting to ‘excessive market concentration’ this initiative should be seen as a global reaction to potential abuse of power by people who find themselves with the freedom to sign cheques in dealing with people who need the money…

The legislation to deal with this situation is already in place, with GSCOP a prime example in the UK.

Couple with this the emergence of the savvy consumer determined to receive demonstrable value-for-money in dealing with retailers and brand owners, and it is possible to see this ‘common sense’ assessment being transferred up the supply-chain. The global financial wake-up call simply swept away the nonsense, enabling all parties to see business dealing more clearly, and gave them the courage to demand evidence of fair-share behaviour…

Also, given the government’s willingness not to punish corporate whistle-blowers when illegal anti-competitive practices are exposed by one of the parties, it can be seen that major retailers will be increasingly tempted to complain to the authorities when they feel, or can prove, that rivals are gaining unfair competitive advantage via illegal pressure on suppliers.

However, in the meantime, a real opportunity exists for those retailers that are prepared to play fair in negotiating with suppliers of all sizes. Despite the global financial pressures, suppliers still have some discretion in allocating trade funding, and are prepared to go that extra mile, or even kilometre, with retailers that are playing by fair-share rules, the ultimate source of real and sustainable competitive advantage….