Waitrose is named and shamed over late payments

Outlook

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The scandalous way Tesco treated its suppliers, which contributed to the accounting scandal from which the UK’s biggest grocer is still trying to recover, clearly wasn’t the end of the issue.

Waitrose has launched a review into the way its suppliers are dealt with, in the wake of reports that it took three times longer than Tesco to pay one of them.

That’s right, Waitrose – the favourite supermarket of the middle classes because it’s cuddly, gives you a free coffee and stocks hearty British fare from small producers whom its shoppers have been led to believe are treated nicely. The chain was at pains to make clear that it had initiated the review (which could take months), has scored well in supplier surveys and does its best to work collaboratively with them.

But the very fact that it has embarked upon a review in the first place speaks volumes: if everything were rosy, why would such an in-depth process be needed?

It comes as Moody’s, the ratings agency, has been complaining that a “lack of consensus” among the UK’s large food retailers is detracting from efforts by the Financial Reporting Council (FRC) to improve the way that they report “complex supplier arrangements”. In other words, those involving rebates for reaching sales targets – the cause of Tesco’s problems.

At their heart supermarkets are simple businesses. Their relationship with suppliers should also be simple. The issue has been made complex by a host of small problems and competing imperatives, overlaid (in some cases) by remuneration arrangements that encourage bad practice.

Given the pressures that are being felt, it is rather hard to see the consensus Moody’s would like being reached any time soon. So perhaps it’s time to impose one.

In the meantime, Waitrose, and its peers, might be best advised to forget about costly reviews in favour of keeping things simple and paying a fair price, promptly.