Speak out and be 'deleted': Suppliers fear supermarket retribution

Some supermarkets are threatening to "delete" suppliers' products from shelves if they speak out about tactics like 45% margins and billing for thefts, a supplier industry group says.

The accusations come as the government orders its promised year-long Commerce Commission market study into supermarkets to see if New Zealanders are paying fair prices for groceries.

This story was first published by RNZ
The study, like the one on fuel the commission completed in December last year, will review whether there is sufficient competition in the market, which is dominated by two main supermarket chains.

The Food and Grocery Council, which represents suppliers, says it welcomes the study but also wants a mandatory industry code of conduct to curb what it calls the "egregious behaviour" of rogues.

Suppliers face major costs, including being billed for instore thefts, council chief executive Katherine Rich told Checkpoint.

"In order to get your product on the shelf today you have to offer supermarkets a gross margin of anywhere between 30% and 45%, just to get on the shelf," she said.

"Then there will be additional costs to promote, shelf costs, merchandising costs. There'll be additional claims, rebates, any opportunity to get more income out of you, the list is endless.

"I believe that most [suppliers] have little or no negotiation power… They're forced to be in a position of being a price taker, it's like, 'take this on board or don't supply us, or have your product deleted'."

The Food and Grocery Council's proposed code would protect suppliers from threats of products being pulled from shelves, Rich said.

"[Under the code] you have to have commercial grounds, rather than saying, 'I don't like that you're complaining to me, I'm going to delete your product' or 'if you don't pay this, I'm going to delete your product'. Deletion is usually the default tactic.

"That is very, very serious because in a market structure where there are two main supermarket teams, if you get kicked off the shelf you can lose anywhere between 45% and 55% of your sales.

 

Katherine Rich, chief executive of the New Zealand food and grocery council. Photo: Supplied
"For some New Zealand comp


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