Responding to the ruling that Tesco had made unilateral deductions from suppliers, taken too long to pay money due to suppliers and, in some cases, intentionally delayed payment, the retailer’s boss Lewis acknowledged malpractice.
“In 2014 we undertook our own review into certain historic practices, which were both unsustainable and harmful to our suppliers,” said the group ceo. “We shared these practices with the adjudicator, and publicly apologised. Today, I would like to apologise again. We are sorry.”
‘I would like to apologise again’
The Tesco boss praised the adjudicator’s professional manner and accepted the report’s findings, which were “consistent with our own investigation”.
Lewis said the retailer had worked hard over the past year to make Tesco a very different company from the one described in the GCA report. “The absolute focus on operating margin had damaging consequences for the business and our relationship with suppliers. This has now been fundamentally changed,” said Lewis.
Tesco’s second apology
“In 2014 we undertook our own review into certain historic practices, which were both unsustainable and harmful to our suppliers. We shared these practices with the adjudicator, and publicly apologised. Today, I would like to apologise again. We are sorry.”
- Dave Lewis
Last January, he added, the retailer had made significant changes to its business, which addressed most of the “the historic practices” slammed in the report.
“We have changed the way we work by reorganising, refocusing and retraining our teams and we will continue to work in a way which is consistent with the recommendations,” said Lewis.
Adjudicator Christine Tacon said: “The length of the delays [in Tesco’s payments to suppliers], their widespread nature and the range of Tesco’s unreasonable practices and behaviours towards suppliers concerned me.
“I was also troubled to see Tesco at times prioritising its own finances over treating suppliers fairly.”
“My recommendations will deal with the weaknesses in Tesco’s practices during the period under investigation.”
Read more about Tacon’s ruling here and watch a video of the apology by Lewis below.
Meanwhile, Lewis first apologised to suppliers and customers for “the bad choices of the past”, made in the relentless pursuit of unsustainable profit at the IGD’s Big Debate conference in London last October.
“One of the greatest strengths of Tesco historically was its performance culture. But we bent it out of all shape – all in the pursuit of one particular goal [a profit margin of above 5.2%],” Lewis told delegates.
Lewis added: “On behalf of myself and the team, the only thing we can say for the choices we made is sorry.”
At the time analyst Julian Wild, head of the food team at legal firm Rollits, welcomed the apology but not the way it was made.
“When he says that Tesco made ‘bad choices’, what he really means is that they screwed their suppliers. Everyone knows it, so why doesn’t he come out and say so?” Wild said.
The GCA’s three criticisms of Tesco treatment of suppliers
- Made unilateral deductions from suppliers
- Taken too long to pay money due to suppliers
- In some cases, intentionally delayed payment