Good News For Independent Retailers

Consumers and independent dealers please read this!

Supermarket watchdog welcome…
...but more is needed to help small shops and suppliers

Following below is an extract from January's edition of the FPB (Forum of Private Business) news letter.  The contents of this brought a smile to my face, at last someone has recognised what the supermarkets are up to.  This is a welcome start to the policing that small independent retail businesses need to combat the unfair trading that is going on with these big giants.  I have commented many times about their practices to various parties and organizations.

When it comes to service, it may be that the general public is beginning to have second thoughts about buying from these outlets. Of recent times the number of complaints that I have received about x, y or z supermarket have risen enormously. A 32” LCD TV at £599.97 is still a major purchase as far as the man in the street is concerned and when they find that it won’t do what they expected (connectivity / performance for home cinema or computer are a common issues) or worse, it develops a fault, there is often no recourse with the store concerned. You’re stuck with it! For a third party to become involved in the repair of such an item, providing an estimate can be quite expensive and many won’t even look at a large screen TV without a major deposit or fee up-front. Even if there is an issue which could be down to manufacture, the parent company usually won’t even discuss the problem with the owner until he can provide a written estimate of the repair cost and full fault diagnosis from a recognised, approved repairer. The repairer is usually not obliged to negotiate for the owner. There are definite benefits to be had by buying from a local independent dealer at what might appear to be a less attractive price. Check out your local independents, they might not be as expensive as you think. Most have got workshop and back-up facilities for the brands that they support. Better still, they have experience under their belts. Ask their advice and buy a brand name that they recommend, it’ll usually be one that you recognise – Toshiba, Panasonic, Samsung , etc. They will have seen numerous of the Yamatachi type brands, from the local supermarkets, brought in for repair by less fortunate individuals, and most of them will have ended up as landfill.  And remember The Sale of Goods Act if you do fall foul of a product that doesn't do what it says on the tin, or if you suffer a premature breakdown - "Sorry Sir, it's just out of warranty" isn't good enough.

Please remember my favourite quotation:

“The bitterness of poor quality lingers long after the sweetness of low price is forgotten.”

The extract:

Forum of Private Business (13 January 2010)

Small suppliers are finally being given protection from supermarkets in the form of an ombudsman, but independent business is calling for further measures to help both suppliers and shops.

The FPB is welcoming today's news that the Government has accepted a recommendation for a body to enforce the Groceries Supply Code of Practice (GSCOP). It was made by the Competition Commission in 2008 after a two-year inquiry into alleged abuses in the groceries market.

In February, the Government will begin a consultation on how best to enforce the GSCOP, including identifying the nature and powers of the ombudsman.

However, there is concern that many suppliers will not come forward to complain about poor treatment at the hands of supermarkets out of fears they will cease to do business with them. A guarantee of anonymity in the complaints process could address this problem.

Research carried out by the FPB shortly after the inquiry was launched found that 76% of respondents wanted a watchdog to oversee the GSCOP, which covers supplier issues such as late payment and retrospective pricing as well as consumer complaints.

However, another survey revealed that 74% of business owners believe they should be guaranteed anonymity when giving evidence to both the Competition Commission and the Office of Fair Trading (OFT).

Further, the FPB believes that the Competition Commission's recommendations for a ‘competition test', which has yet to be implemented, designed to prevent individual retail giants from dominating local markets, would simply allow other big supermarkets to compete and offers little to struggling high street shops.

In its preliminary findings, the Competition Commission said that, between 1999 and 2006, the entry of a supermarket into a town centre had caused more existing independent grocers and local markets to seek alternative locations than it had encouraged new retailers to move in.

As long ago as 2006, the All-Party Small Shops Group warned that, with around 2,000 small shops closing every year, the majority of the UK's independent retailers could disappear by 2015.

Now, with the recession driving more and more shoppers to discounted supermarkets, the FPB is concerned that the situation is even worse for shop owners.

The Competition Commission's investigation has called into question some other alleged business practices of supermarkets, such as below-cost pricing, where large retailers significantly undercut market prices on the high street by selling certain products at a loss in order to soak up trade, making up these losses on other product lines.

The FPB has been critical of previous investigations into the practices of large retailers, including the £116 million in total fines imposed in 2007 following the OFT's probe into the dairy market price fixing scandal – a drop in the ocean compared to the supermarkets' vast profits.

"Small suppliers and retailers continue to suffer as a result of supermarkets' anti-competitive practices. One of the main problems is that many suppliers feel intimidated into silence and do not speak out; a situation we need to change," said the FPB's Chief Executive, Phil Orford.

"While a dedicated watchdog for these businesses is welcome, it does not go far enough to hold large retailers to account or to address the need to reinvigorate small shops on our high streets and the communities they serve."

Permission was obtained for the reproduction of this article.