Retailers accused of squeezing suppliers

18 February 2009

18 February 2009 | Andy Allen

Marks & Spencer (M&S) has reportedly demanded lower prices from suppliers as the economic downturn starts to bite, according to The Guardian.

The newspaper claimed the company told suppliers to slash costs in order to offset the fall in the value of the pound, which makes sourcing from overseas more expensive. It was not clear whether the report applied to domestic as well as overseas suppliers.

According to the report, one supplier said: "It is a constant battle to maintain agreements that were signed off before the economic crisis took a turn for the worse last autumn."

Several other suppliers reported that M&S has tried to renegotiate contracts in response to a slide in its profits.

A spokesman for the retailer refused to confirm the report, but said: "We're always looking at our supply base to ensure it best meets our needs."

Waitrose has also been accused of increasing pressure on suppliers to give discounts, according to a report in industry publication The Grocer. It claimed the supermarket has taken a harder line with suppliers since reorganising its buying teams in recent weeks.

One supplier told the magazine that buyers were demanding discounts in meetings and were increasingly uncommunicative. Others were complaining the retailer was "firmer than usual" and was penalising mistakes heavily.

A Waitrose spokesman told supplymanagement.com: "In a challenging economic climate it is essential for the growth of Waitrose and our suppliers that we work together to provide a compelling offer for our customers. In line with our legacy of responsible supplier relationships, we are working to achieve this in a fair and mutually beneficial way."

SMfeb2009

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