Kingfisher set to cut 3,000 suppliers

27 November 2003
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27 November 2003 | Simon Binns

Retail group Kingfisher, which owns DIY store B&Q and Woolworths, will cut more than 3,000 of its 8,000 suppliers over the next five years.

A Kingfisher spokesman said: "The plans to reduce our supply base are less about cutting costs and more about working far more closely with fewer suppliers.

"It's about buying more from them and forming more direct relationships rather than working through wholesalers.

"We want to avoid the middleman. Wholesalers can often add something in terms of value and service, but most of the time, they do not. We want to build exclusive own-brands and undertake more direct sourcing," he added.

The announcement, which comes as Kingfisher's financial results showed slowing third-quarter sales, aims to concentrate on developing exclusive branding relationships to sell its own-brand products.

"We are looking at dealing more directly with suppliers in Asia, including Hong Kong and Shanghai, and developing more exclusive products and greater innovation," the spokesman said.

"What we want is for the top 200 suppliers, which account for 57 per cent of purchases, to have a larger slice of the pie than they do currently," he added.

Heading the reduction will be George Adams, who was promoted this month to the post of commercial chief executive from his previous job as commercial managing director at B&Q.

Adams will oversee a £1 billion cutback on suppliers over five years, reinvesting around £750 million to forge "longer-term relationships" with fewer suppliers, although the group is keen to reiterate that the move is not a cost-cutting exercise.

"It will be a continuing investment over a similar period and will concentrate on improving and modernising stores, keeping service up and prices down."

SMnov2003

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