Tesco plans to de-list suppliers

The Grocer reports that Tesco has appointed Boston Consulting Group (‘BCG’) to conduct a range review in order to reduce SKUs (stock keeping unit) by up to 30%. It is thought that Tesco intends to complete this review and de-list suppliers quickly.

Tesco has, of course, had enough regulatory issues publicised recently. The Serious Fraud Office is investigating how Tesco reported the commercial revenue it has received from its suppliers. Additionally, and relevant to BCG’s review, the Groceries Code Adjudicator asked Tesco last September to “examine its behaviour towards suppliers during the company’s internal review” and report on whether it has breached the Groceries Supply Code of Practice (‘GSCOP’).

GSCOP requires retailers to provide suppliers with reasonable notice when they are to be de-listed. That being the case, it will be interesting to see how Tesco, BCG and the Groceries Code Adjudicator get on this year. The Grocer’s intelligence indicates that BCG is conducting the range review and de-listing suppliers, rather than Tesco’s buyers themselves, because it will take buyers too long. Buyers have to be, and are, trained on GSCOP’s requirements. BCG’s consultants are not subject to the same requirements.

Tesco should probably bear in mind that from 6 April 2015, the Groceries Code Adjudicator should have the power to fine retailers and whilst the Adjudicator has never undertaken an investigation, there will be a first. If BCG’s range review is not carefully handled, it could be Tesco.

For more information in relation to GSCOP or supply contracts, contact our Retail experts, Andy Brian on 0113 227 0354 or at andy.brian@gordonsllp.com or Mark Jones on 0113 227 0297 or at mark.jones@gordonsllp.com.