Tesco asks building consultants to knock down prices

14 January 2009

14 January 2009 | Jake Kanter

Tesco has written to a number of its property consultancy suppliers for price reductions.

A spokesman for the retailer confirmed it had sent letters to some vendors including construction and management consultancy Turner & Townsend and project and cost management consultants Faithful+Gould, to request reduced fees.

He said tough trading conditions means the company wants to ensure the cost benefits of lower raw material prices are passed on.

Tesco, which procures £1.4 billion of construction work a year in the UK, said in a statement: "It is important to remember the current economic climate, particularly for the construction industry. Unlike many developers, Tesco will continue its growth and offer continuity for the trade. Contracts are considered case-by-case and we must take into account that the cost of raw materials has also fallen."

Media reports claimed price cuts could be up to 50 per cent and that consultants would lose work if they did not agree to the reduction. Tesco said it "did not recognise" the quoted figure and it was negotiating better terms with vendors rather than threatening them.

SMjan2009

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