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Retailers squeeze suppliers for discounts

Suppliers to the UK’s biggest high street chains are feeling the pinch as increasing numbers of retailers seek discounts to offset sluggish sales.

Drapers understands that several retailers are asking suppliers for retrospective discounts, as they attempt to pass mounting pressure on margins down the supply chain. Among them is Sports Direct, multiple sources have told Drapers.

One supplier said Sports Direct had asked for 1% off everything for “currency devaluation” and 1% off anything made with cotton.

Another supplier said Sports Direct has asked for a 2% discount on invoices from November: “I’ve seen it plenty of times over the years and all you can do is negotiate. It’s the nature of the beast. Many retailers have done it before and will do it again. It’s wrong. But it will keep happening for years to come.”

Sports Direct declined to comment. 

Two other high street chains are said to have contacted suppliers asking for a discount in recent weeks. This follows Drapers’ revelation last month that Asos was asking suppliers for a 3% discount on all invoices for stock received from 1 September.

“Retailers ask for discounts all the time,” said one womenswear supplier to high street multiples. “It’s appalling the way they’re doing it to pass all the costs on to the supply base. It’s definitely because margins are being squeezed. It’s tough because sales are not coming through at the minute.”

Jenny Holloway, CEO of London-based manufacturer Fashion Enter, said the situation is getting worse for suppliers: “It’s so bad out there. Retailers keep asking for discounts and it’s been particularly bad lately because of poor sales. They think they can ask for discounts if orders are a day late. Suppliers are complaining that it’s one-sided towards the retailer.”

The managing director of one supplier told Drapers: “Retailers say it’s [discounting] for growth and suppliers’ benefit, but it’s only ever done when a business is in distress. Suppliers are at the bottom of the barrel, but we cannot fund the mistakes being made by retailers.”

 

 

 

 

 

Readers' comments (1)

  • Retailers will keep asking for discounts as long as the suppliers keep giving in. Ultimately it's them that are causing the problem.

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