Major Scandals in the UK Retail Industry
The retail sector is never without its brazen bosses and boardroom coups. Retail Insight Network has rounded up the top five UK retail industry scandals over the past ten years.
1) Horsemeat
The 2013 horsemeat scandal saw DNA from horses and pigs found in a range of cheap frozen beef burgers and ready meals. The Food Safety Authority of Ireland (FSAI), which conducted the tests, began retesting the product ranges after its initial findings due to the seriousness of the case.
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By GlobalDataThree factories were revealed as the source of the contaminated beef products – Silvercrest Foods and Liffey Meats in Ireland, and Dalepak in Yorkshire. Silvercrest and Dalepak are both branches of ABP Food Group, one of Europe’s largest beef processors.
After wider industry testing by the UK Food Standards Agency (FSA), it was revealed that some ‘beef’ products for supermarkets such as Tesco and Aldi were in fact up to 100% horsemeat.
2) Tesco accounting scandal
Tesco’s accounting scandal of 2014 resulted in the resignation of eight executives, including chair Sir Richard Broadbent, nosediving shares and charges brought by the Serious Fraud Office (SFO).
Stating it expected profits for the first half of the year to be around £1.1bn; Tesco was accused of manipulating figures as it was later found to have overstated its profits by £284m. The supermarket chain then saw a £6.4m loss in 2015, with £85m compensation made to investors and £129m paid out in fines and other costs in 2017.
Britain’s financial watchdog, the Financial Conduct Authority (FCA) determined that Tesco did indeed commit market abuse, with several executives standing trial in court.
3) Food safety dates
The largest supplier of chicken to UK supermarkets, 2 Sisters Food Group, was found to be altering the slaughter date of poultry in 2017. The news sent its supermarket clientele into panic due to consumer’s unwittingly purchasing meat past its use-by date. The meat supplier produces a third of poultry products consumed in the UK, supplying supermarkets such as Tesco, Marks & Spencer, Aldi, Lidl and Sainsbury’s.
The investigation, conducted by the Guardian and ITV News, resulted in job losses, FSA surveillance and a parliamentary inquiry. However, 2 Sisters claimed no regulatory breaches had occurred but welcomed the FSA’s report, which included points of improvement.
4) Faux fur vs real fur
Major high street and online retailers including Boohoo, Missguided and House of Fraser were found to be selling real fur items as fake fur in 2017.
Cat fur was discovered on shoes from Missguided by animal protection charity Humane Society International (HSI). The use of cat and dog fur for clothing was banned in the EU in 2009. The investigation also reportedly found rabbit, dog, racoon and mink fur being sold in a concessions store within department store chain House of Fraser.
The Environment, Food and Rural Affairs Committee launched an inquiry into the reports and found that retailers along with local authorities and the Trading Standards had been “poor at enforcing regulations.”
5) BHS
After going into administration, ailing department store British Home Stores (BHS) was pushed further in the spotlight in 2016 due to its pension scheme. The scheme was revealed to be £571m in deficit, which did not pose an initial threat at the time. However, it was after owner Sir Philip Green offloaded the company for £1 in 2015 that authorities realised he may have been attempting to shirk responsibility in paying out the pension costs.
In addition to this, the Green family was reported to have received more than £400m in dividends from BHS, with no tax paid as it was paid to Green’s wife who resides in tax haven Monaco.
Green eventually paid £363m into the scheme in 2017. Existing scheme members can now remain in the current scheme, transfer to the new scheme or opt for a lump sum if eligible.
