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Safeway results - Producers
- Indicator 2.1
- Indicator 2.2
- Indicator 2.3
- Indicator 2.4
- Overall commentary and examples of good practice
- Supermarket comments
Indicator 2.1
Issue: Corporate commitment to trading integrity with the supply chain
Indicator: Board-level responsibility for trading integrity
Safeway has a named Board member — Jack Sinclair, Group Marketing and Trading Director — who is accountable for integrity of trading relationships with all Safeway suppliers. At an operational level the Safeway Trading Team report to John Durkan, Trading Director, who in turn reports to Jack Sinclair.
Indicator 2.2
Issue: Trading integrity with the supply chain
Indicator: Standards and codes of practice
Safeway has signed up to the Department of Trade and Industry’s Code of Practice on relationships with suppliers. Furthermore, the company reports that it also has its own code of conduct (Code of Business Practice) and its Terms and Conditions of Purchase contain some elements that are stronger than the DTI code--these were supplied to IIED on request, but are not available on the Safeway website. Safeway reports that Terms and Conditions of Purchase were sent to all 2000 suppliers in October 2002. Safeway also reported that it requires its first level suppliers to abide by the code(s) with their suppliers in order to ensure that these good policies penetrate along supply chains to smaller suppliers and farmers—this is incorporated into Safeway’s Terms and Conditions of Purchase’. Buyers — generally the point of contact for suppliers with the company — are involved in a “comprehensive training programme” on the “provisions and application of the Code.”
Safeway has implemented the Food Standards Agency Best Practice on Country of Origin Labelling; in other words, UK farmers and consumers can be sure that imported food is not misleadingly labelled to ‘appear’ British.
Safeway also reports that the company is committed to NOT making higher profits on organic and Fairtrade products, though no specific policy appears to be in place. Both sectors “are managed in exactly the same way as mainstream products, with comparable targets on sales and profitability.”
Indicator 2.3
Issue: Fair trading relationships
Indicator: Integrity of the trading relationship with UK farmers and suppliers
In a statement dated 1 August 2003, Safeway stated that “given the extraordinary circumstances that Safeway faces that we will not participate in the 2003 third party supplier survey.”Safeway thus excluded itself from the opportunity to achieve a high score in the Producers module.
Indicator 2.4
Issue: Support for smallholder producers in developing countries
Indicator: Availability of and promotion of Fairtrade Marked products
Safeway now stocks 20 Fairtrade products, and over the past year has developed own brand FT products. Fairtrade citrus lines will be introduced shortly.
Overall commentary and examples of good practice
Examples of best practice by Safeway:
- Dealing with the supply chain. Safeway ensures that its code of conduct for trading with suppliers penetrates further ‘upstream’ to primary producers by including the Code of Conduct within the Terms and Conditions of purchase from 1st tier suppliers; ie. those first level suppliers must respect the code when dealing with ‘third party’ suppliers.
- Labelling. All meat and products containing meat give an indication of their country of origin. This relates to all new products and those undergoing label or product re-design. For example, new ready meal products indicate country of origin of the protein elements of the product. Likewise, recently launched ready meals indicate that the chicken is from Thailand.
- Own brand.Safeway is launching a reformulated roast and ground own brand coffee range using coffee produced to Utz Kapeh standards for responsible coffee—not a ‘Fairtrade’ label, but a code is based on the EUREPGAP Protocol for Fruits and Vegetables. This Protocol was developed by the leading European retailers to provide basic assurance for food safety and environmentally and socially appropriate growing practices.
Areas for improvement:
- Safeway excluded itself from the opportunity to achieve Best in Class in the Producers module by not subjecting itself to an independent survey of its suppliers. While its decision is understandable considering the takeover interest around the company, RTTT considers that the supplier survey is the most important element of this module, because it measures practice rather than policy. Safeway has been singled out by critics for demanding up-front fees from suppliers. Safeway denies making demands. The company explains that a feature of Safeway’s High:Low pricing policy requires support from suppliers to run the deep discount deals on offer every week. This means that large suppliers are involved in promotional activities; they provide part-funding for the promotional programme . This pricing strategy makes supplier relations (and its measurement) particularly important for Safeway.
Supermarket comments
“Over the past year, as the hitherto rapid growth rate of the organic market has slowed, especially in the produce sector, Safeway has increased its promotional activity in the organic categories. This has involved some loss of margin but has increased the company’s sales growth.
“As is shown by the findings of RTTT, Safeway is committed to developing and maintaining strong and effective relationships with its suppliers. Safeway remains fully committed to the DTI Code of Practice throughout its Supply Chain. Safeway will continue to drive the implementation of EUREP standards throughout its supply chains, and encourage the development of further Fairtrade products. Safeway recognises that strong relationships with its suppliers are vital to its ongoing success. The fact that Safeway is the only major multiple retailer prepared to take part in RTTT is a clear sign of its commitments and delivery in this area.”