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Concessions hit by energy bill demands

Department stores House of Fraser and Debenhams have written to suppliers asking them to help pay their soaring utility costs.

House of Fraser is contacting concessionaires to explain that energy costs will rise by 59% over the next year and that without help from concession partners it could have to slow expansion plans.

Debenhams has also been in touch with their concessionaires telling them that their energy and fuel prices have doubled in the past three years.

At Debenhams it is understood that concessionaires have been asked to pay an annual fee based on both the square footage of their concessions and the increase in the retailer’s bills during the financial year.

Both chains have been following robust store opening strategies over recent years. House of Fraser has opened in Belfast, High Wycombe in Buckinghamshire and Bristol, and Debenhams has a new store in Liverpool. Both have stores due to open at the end of the month in the new Westfield London shopping centre in White City, west London.

One supplier told Drapers: "I've never heard of this kind of charge before. The costs of this kind of thing are supposed to be included in the commission that a concessionaire pays. Normally a business might try to increase the commission but that normally means they have to give quite a bit of notice. This is a way of getting a contribution more quickly.

"It looks like it’s not just a one-off either, and our contributions will go up every year in line with their costs."

It will be the second time that HoF has squeezed suppliers. After Highland bought the business in November 2006 it demanded contributions for a £50 million overhaul to help it reach its aim of becoming the UK’s biggest premium department store chain.

A House of Fraser spokesman said he understood concessionaires' frustrations but added: "We are only implementing a trend that our peers across the sector will be compelled to follow." He said that concessions that showed a sales uplift could have all the energy charges refunded.

A Debenhams spokesman said the change would be "small", and rebates would operate for improved sales.

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