George at Asda suppliers face tough new penalties

George at Asda has hit suppliers with tougher terms, quadrupling its penalty charges to a blanket 20%.

In a letter to suppliers, the supermarket said the new terms, which come into effect on March 1, meant suppliers would be charged 20%, compared with the previous 5% penalty, for "non-compliant" deliveries such as mis-labelled goods or goods not packed to Asda's health and safety standards.

George suppliers already incur a 20%-off penalty for late deliveries. Suppliers have a two-hour window in which to deliver or face the hefty discount

George global sourcing and development director Jon Wragg insisted that the increase was "fair" and added that it was designed to reduce the number of non-compliant deliveries. He said: "Since introducing the 20% charge for late deliveries 18 months ago, the number of incidents has declined by 70%.

"When the wrong product is delivered, George loses out on its sales and margin, and this is normally more than the supplier loses out by."
Suppliers to rival supermarkets were shocked by the hikes. One told Drapers that a 5% penalty charge was standard in the supermarket sector.

However, Wragg said Asda's warehousing facilities were running at full capacity, giving the grocer no margin for error when it came to deliveries. He added that the supermarket's suppliers had not complained about the increase.

However, one angry supplier told Drapers George was "having its cake and eating it".

"Unfortunately we now seem to be drifting towards a time when our customers will be issuing fines for typing errors and spelling mistakes," he said.

Separately, George has closed its standalone store in Leeds after its Living format in the city was refurbished.