Marks & Spencer has angered food suppliers by demanding bigger price discounts as it battles falling sales, according to a report in the Daily Mail.
The newspaper claims the high-street store met its top ten suppliers - which include Northern Foods, Uniq and Bakkavor - to unveil a crackdown on purchasing costs, after an internal review known as ‘Project Genesis’.
The report states that in addition to demanding a two per cent discount on all bills, M&S wants suppliers to provide additional discounts of up to 3.5 per cent, depending on sales.
The contribution towards marketing and advertising costs is also being raised from 0.5 per cent to 1.5 per cent of the total bill.
The Mail quotes a supplier source as saying, “M&S is being the most brutal” of the food retailers.
The chain has admitted “revising” its supplier terms, states the article, but has denied it is a reaction to poor trading.
The clothing and food retailer said in today's Financial Times it was looking to claw back money from suppliers that have benefited from big volume increases in the past few years since the roll-out of the specialist Simply Food stores.
“Over the past three years, we’ve seen 23 per cent growth in our food business and a doubling in the number of Simply Foods,” M&S said. “With this, our suppliers’ volumes and revenues have also grown. We’re making some changes to our supplier terms to reflect this, while ensuring we keep our payment terms at 10 to 25 days.”
In January, M&S reported poor Christmas results, with like-for-like food sales down 1.5 per cent.
Northern Foods and Uniq declined to comment on the decision to the Mail.
The four biggest supermarkets are also looking to keep retail prices down, in spite of suppliers insisting that they will have to push up what they are charging for manufactured food products to cover big rises in dairy, wheat and fuel costs, according to the Financial Times.
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