b2b trading practices a retailers view · main conclusions of the commission retail study (1) the...
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B2B TRADING PRACTICES – A RETAILERS’ VIEW
Christel Delberghe
EESC, 22 June 2016
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Structure
• Retailers in the food supply chain
• Why fairness matters
• The SCI and achievements
• Conclusion
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Retail & wholesale is…
Choice
5.4 MILLION
COMPANIES
1 OF EVERY 7 WORKERS
IN THE EU
10.6%
OF GDP
INNOVATION
• Processes
• Products
• Experiences
Convenience
Clear Product
Information
Affordability
Jobs
Tax Revenue
AND IT PROVIDES…
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Retailers in the food supply chain
• The supply chain is made of many operators, each step adds value
• Retailers do not buy direct from farmers; they do not set the price paid
to farmers
• Retail is highly competitive – consumer have choice and exercise that
choice
• Retail concentration is moderate in most European countries (DG COMP
study on modern retail)
Farmers Wholesale Processors Wholesale Retailers Consumers
Main conclusions of the Commission Retail Study
(1) The concentration of modern retailers at wholesale level
• Most EU member states have low-moderately concentrated modern retail sectors (below 2500)
• The Nordic and Baltic countries have highly concentrated retail sectors (above 2500)
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HHI of Modern Retail sector (2012)
Sources: Planet Retail, EY analysis.
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Retailer margins are narrow
Example: France – decreasing consumption ; narrow net margins on individual fresh product lines
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Retailers have a limited impact on agriculture markets
Example: in Germany, only 37% of milk production ends up in the food distribution chain
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Dominant forces driving the consumer landscape in the next 15 years
Source: McKinsey
Changingface of the consumer
Evolvinggeopoliticaldynamics
New patterns of personal
consumption
Technologicaladvancement
Structural industry
shifts
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Why fairness matters
• Retailers need sustainable and efficient supplier relationships:
Consumer demand
Efficiency
Innovation and differentiation
Costs of disruption
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SCI objectives
• fair business practice as basis for commercial dealings
• Integrate principles of good practice into company day-to-
day operations, and control their application
• Ensure companies address disputes in a fair and
transparent manner
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Ten Principles of Fair Trading Practice
3 General Principles
1. Consumer Interests and
sustainability
2. Freedom of Contract
3. Fair Dealing
7 Specific Principles
1. Written agreements
2. Predictability
3. Compliance with agreements
4. Information exchange
5. Confidentiality
6. Responsibility for risk
7. Justifiable request
Compliance with applicable laws including competition law
The Principles of Good Practice
Agreed by: AIM, CEJA, CELCAA, CLITRAVI, COPA-COGECA, ERRT, EUROCOMMERCE, EURO COOP,
FOODDRINKEUROPE, UEAPME, INDEPENDENT RETAIL EUROPE
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SCI: the commitments
1st commitment:
Respect the Principles
2nd commitment:
Respect the process
1. Consumer interests and
sustainability
2. Freedom of Contract
3. Fair Dealing
4. Written agreements
5. Predictability
6. Compliance with agreements
7. Information exchange
8. Confidentiality
9. Responsibility for risk
10. Justifiable request
1. Registration by European CEO
2. Review and monitor compliance with
Principles
3. Communicate internally, train staff for
compliance
4. Inform business partners
5. Dispute resolution capability
6. Participate in surveys
REMEDIES
Depend on dispute resolution option
REMEDIES / SANCTIONS
Proportionate and gradual
Decided by the Governance Group
(Rules of procedure)
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SMEs are key beneficiaries of the SCI
SME decision (Sept 2015):
Small companies (<50 employees)
Registration
Can participate in annual survey
Medium sized companies (>50 employees)
Light registration procedure
Large companies (> 250 employees)
Full set of commitments
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Towards concrete outcomes: progressachieved Year 2
388 groups/companies registered; 1234 operating companies across the EU
266 SMEs registered (> 50% of total #)
Farmers, wholesalers, processors, retailers
National platforms in 5 countries (BE, NL, FIN, CZ, DE) ; interest & relatedactivities reported in 15 countries
Over 20.000 people trained
A high level of satisfaction (75%) among participants; SCI has helped companies improve their daily communication with their trading partners (44%) and deal with conflicts
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Conclusions
• Supply chains are there to meet a consumer demand
• Retailers need efficient and sustainable supply chains
• SCI a tool to make fair practice to become the norm
• UTP regulation will not solve the agriculture crisis
• We encourage:
A market oriented CAP that respects the single market
Better organised agriculture sector that is more responsive to consumer demand
Structured supply chain dialogue