Coronavirus: retailers urged to support suppliers

31 March 2020

UK groceries code adjudicator Christine Tacon has written to retailers encouraging them to help suppliers through a “difficult time”.

Tacon said she had generally resisted saying anything about payment terms throughout her tenure as the code does not cover them. 

However, in the current groceries supply situation due to the coronavirus outbreak, cash flow was critical for many suppliers, she said.

“Some retailers already pay small suppliers within 14 days and have recently accelerated those payments still further, which is appreciated,” Tacon said. 

“Anything else you are able to offer your suppliers to help them through this extremely difficult time would be very welcome.”

Tacon is to step down at the end of her current term in June 2020 after six years in the role, and the government is currently looking for a replacement.

Meanwhile, Sainsbury’s is to pay small suppliers instantly as part of a package of support to maintain its supply chain throughout the coronavirus crisis.

The retailer said nearly 1,500 small businesses with less than £100,000 annual turnover with Sainsbury’s would benefit.

“Support will also be available to suppliers who find themselves in distress as a result of the ongoing uncertainty,” the company added.

Paul Mills-Hicks, commercial director at Sainsbury’s, said: “We want to support our suppliers and partners because it is vital that we all help each other during this challenging time.

“The businesses we work with are working flat out to supply us with product and going above and beyond to deliver direct to our stores... and we will do all we can to help.”

Morrisons has also adopted coronavirus payment terms which it said will benefit the retailer’s 3,000 small suppliers and farmers by supporting their cash flow. 

An extra £2bn was spent on groceries as customers stockpiled goods ahead of the UK lockdown. 

Market analysts Nielsen found total till sales at the UK’s supermarkets increased by almost 21% between 24 February to 21 March. 

Shoppers on average made three extra shopping trips throughout the four-week periond, amounting to around 79m additional trips compared to the same period last year. 

In the week ending 21 March, sales soared by 43%. Supermarkets shortly afterwards introduced restrictions on the amount of people allowed in stores at once. 

Mike Watkins, UK head of retailer and business insight at Nielsen, said:“With households making almost three extra shopping trips in the last four weeks, this small change in individual shopping behaviour has led to a seismic shift in overall shopping patterns.”

Earlier this month, UK supermarkets urged customers to shop considerately and avoid panic buying as items like toilet roll, cleaning products and dried and tinned goods sold out.

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