John Lewis and Debenhams follow suit on supplier rebates

John Lewis and Debenhams have emerged as further high street vendors demanding discounts from suppliers following the exposure of Monsoon Accessorize's mandatory supplier rebate.

Last month, PrintWeek reported that Monsoon Accessorize had moved to charge suppliers a rebate of up to 4% on all invoices and imposed a similar blanket rebate for all new contractors.

Now it has been revealed that it is not alone in demanding discounts on invoices.

In a letter seen by PrintWeek, Debenhams told its suppliers there was an "expectation" that they would get a minimum cost price reduction of 2%, to be retrospectively applied to all orders due for delivery from 4 March onwards.

The letter stated: "There is an increased focus within the business to optimise margin, given the strong trading performance in Home and resulting increase in business for suppliers."

Suppliers are expected to "challenge back to factories" in order to deliver the required savings, the letter continued.

Robert Downes of the Forum of Private Business (FPB) criticised the move saying that attempts to reduce prices on previously agreed contracts were "not only deplorable but lacked ethics".

"These are simply punishing measures from a firm which only last week announced a profits warning, and who are looking to share their pain with certain suppliers whose products are proving popular."

The implementation date of the rebates fell on the same day that the high street retailer announced in its first half trading update that January sales had fallen 10% year-on-year due to snow. The announcement knocked 15% off its share price.

Similarly, John Lewis has written to its suppliers notifying them of a mandatory growth rebate, which ties them into making discounts of up to 5.25% should the sales of their products through the high street and online stores increase.

A spokesperson for the high street retailer, which also owns Waitrose, said: "John Lewis has recently written to a small number of suppliers to discuss bringing their commercial agreements in line with the rest of our supply base.

"We create partnerships with our suppliers with the intention of mutual growth and sharing the proceeds. The intention at all times is to develop a long-term business with benefits for our partners and a sustainable growth opportunity for our supply base.

"All commercial agreements are confidential and are discussed and debated individually. As ever, a supplier retains the right to discuss all aspects of their commercial agreement with us and whether it is profitable for them to supply us."

Downes branded John Lewis a "bully" and accused them of profiting at the expense of small businesses. "This isn’t an either/or situation for suppliers – it’s put up and shut up," he said.

"It is an outrageous scheme cooked up by John Lewis to boost their own coffers purely at the expense of small business. What a way to treat your suppliers, who are effectively having their pockets picked by John Lewis on the back of strong trading.

"It’s not as if John Lewis is fighting the wolves from the door. Not a year goes by when they aren’t gloating over increased profits, but hopefully the public can now see in part how they achieve that – and that’s by abusing their supply chain."