What’s next for Canada’s grocery code of conduct?
While Canada’s major grocers have all signed on, there is still a lot of heavy lifting to do before the grocery code of conduct gets up and running next June, its backers say.
Advocates breathed “a sigh of relief” earlier this month when Walmart and Costco announced their support for the industry-led code. But much work lies ahead, says Gary Sands, senior vice-president of public policy and advocacy of the Canadian Federation of Independent Grocers (CFIG) and member of the The Grocery Sector Code of Conduct Interim Board of Directors.
The first big challenge will be to recruit the adjudicator who will oversee the code. A search firm has been hired and it should take about four months before the position is filled, says Michael Graydon, CEO of Food, Health & Consumer Products of Canada (FHCP) and chair of the interim board.
A guidance document on the code’s principles will have to be developed, and “there’s still going to be robust negotiations that take place between retailers and suppliers,” Sands says.
Educational materials will also have to be created to ensure retailers and suppliers understand the principles of the code.
Outreach to the many independent grocers and small- to medium-sized manufacturers that are not CFIG or FHCP members will be necessary, Sands and Graydon note.
“We’re going to have to attempt to bring them into the fold to make sure the code is working for them,” Sands says.
Graydon says the interim board of directors will engage with provincial associations who may be able to assist in a membership drive.
In addition, a budget must be established for the year ahead and membership dues set for all classes that will be covered by the code.
The office of the code will be self-funded, but the government is providing $1.2 million in short-term funding to set it up.
“This has been a long process, but we are now able to move forward to implementation which we believe will strengthen the relationship between all stakeholders involved and continue to provide Canadians with a healthy and robust food supply chain,” reads a July report from the office of the grocery sector code of conduct interim board of directors.
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Sands and Graydon are adamant that the code was not watered down, and its principles were not changed to bring holdouts Loblaw and later, Walmart and Costco into the fold. However, “we were happy to tweak the language in some areas to provide more clarity,” Sands says.
Graydon says getting all the retailers involved “was critically important to make sure that we had a pathway forward” for a voluntary code. Plan B would likely have been a government-regulated code.
“We felt very strongly that the code needs to be run, managed and facilitated by the industry and not within the hands of government, because you lose control.”
Sands says the code will lead to cultural changes in how industry players work with one another. However, it will not level the playing field. “The playing field in the food industry is never going to be level again. It’s too consolidated. [That] horse has jumped that fence and galloped off the farm.”
What the code will do is help independent grocers stay on the playing field, he says. “It will ensure that some of the practices that put independents at a competitive disadvantage are addressed. The adjudication process will be levelled [and] a one-store independent will be treated the same as a major supplier.”
Currently, independent retailers have little leeway in disputes with suppliers, Sands says.
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Graydon says the code will provide economic certainty and stability for suppliers and brings more balance into the supplier-grocer relationship. Greater confidence within the manufacturing community should translate into investments in innovation, promotional spending and program spending.
The eventual result will be more variety of products for consumers. As the code “becomes common practice, it will also hopefully help stabilize pricing.”
Sands says relationships have already improved among board members who worked on the code. “Because we had to work together on this code, we stopped finger-pointing and we started talking to each other instead of at each other.”
He sees brighter days ahead for the industry. “Five years from now people are going to look back on how the industry has changed in terms of how it deals with each other, and they’re going to point to the code.”
