Asda’s fresh produce suppliers are beginning to voice their discontent at demands they are facing from the retailer for massive cash investment.
While no supplier would criticise Asda on-the-record, several told FPJ this week that the Wal-Mart subsidiary is acting unreasonably in negotiating suppliers’ contributions to its ‘investment for growth’ and ‘buy for less’ strategies. In some cases, the retailer has solicited cheques for millions of pounds.
“We have been asked by Asda for a sum that equates to about 10 per cent of our turnover,” said one supplier. “They wanted a contribution to growth that has already happened, so they want money retrospectively as well as investment for future growth.”
Fresh produce companies are also disgruntled at the nature of meetings with the Leeds-based chain, which they say bore no resemblance to previous negotiations. “The Asda colleagues were clearly very uncomfortable with doing the asking and were very wooden,” one UK firm said. Other suppliers suggested Asda’s negotiators were “very junior” and “unprofessional - reading from a piece of paper like a script”. When pressed as to how specific figures were calculated or justifiable, they were allegedly unable to give answers.
The news has been met with concern by Asda’s business unit director for fresh produce Nick Scrase. “For anyone who has any concerns at all about the buy-for-less process or any negotiations in general, my door is always open and they are very welcome to come and talk to me,” he said. As FPJ went to press, Scrase was meeting with the only fresh produce supplier who had contacted him with concerns following the negotiations, so far.
“We have a well deserved reputation for being tough in negotiations but also for being fair to suppliers,” said an Asda spokeswoman. “This is a good opportunity to grow our business and we want to share the benefits with our customers and suppliers, but this is not about retrospective payments.”
But FPJ has learned this week that some suppliers claim to be being charged millions of pounds retrospectively, some even though they have been told their business with Asda is reducing. One fruit firm claimed to have been billed for a six figure sum more than three years after ending its relationship with the retailer.
Asda would not deny it has asked some suppliers for cash. “We are asking people to invest,” said a spokeswoman, “that will be taking many forms. This is just round one of negotiations; it is a journey not a destination, and if there is anything people are not comfortable with, we would like them to contact us.”
One supplier questioned the principles of the strategy. “We sell Asda a product at a price - if they don’t want it, they shouldn’t buy it. If they do, they should accept that price. It is no more complicated than that,” the insider said, claiming his business would steadfastly refuse to pay the cash being demanded of it by the retailer.
Not all suppliers are so disgruntled though. “Asda is our only customer so of course we are going to listen to them,” said Mark Harrod of Fenmarc which supplies the Wal-Mart subsidiary with fresh vegetables. “They are trying to refine their business - they want to win, we want them to win. Given the nature of the marketplace we are being asked to help them so we will try and make sure we do.”
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