Waitrose accused of ‘abuse of power’ in supermarket supplier rows

The food division of the John Lewis partnership has been lambasted by small suppliers who told trade journal The Grocer that the practice of issuing fines was “an absolute abuse of power”.  

Tesco suppliers, it was reported yesterday, responded to similar demands with accusations of unfair practices and said that the action could cause some suppliers to go out of business.

The latest controversy begun this summer when Waitrose began deducting money from supplier accounts in line with a new policy to charge a £60 fine for each late delivery to one of its regional distribution centres.

A report in The Grocer claims that the policy is detrimental to smaller suppliers. In many cases volume being delivered to Waitrose are not big enough to justify full lorry loads, so some small suppliers consolidate their loads using third-party logistics. This means that, because fines are levied to all suppliers with products on a shipment, the supermarket will benefit from multiple payments of £60. However, one major supplier with a full truck would only incur one single £60 penalty.

The MD of a small chilled supplier told The Grocer his company had been fined thousands since the summer and estimated it would take 5% off the company’s margin with Waitrose, potentially forcing it to ask for a price increase.

“This is an absolute abuse of power,” he said. “I’ve spoken to other suppliers and from what I can tell, smaller, weaker companies are much more likely to be fined,” he said. “We will review the prices we charge Waitrose to compensate us for the loss of margins.”

A Waitrose spokeswoman quoted in the same report insisted that the company only levied fines if a delivery was more than 45 minutes late: “Late deliveries cost us a significant amount of money. It is only fair that late suppliers contribute to that, and £60 fairly represents the cost to our business. We do not profit from it in any way.”