The Original Factory Shop is asking suppliers for a retrospective “marketing contribution”, to support the investment and development of its store portfolio.
In a letter seen by Drapers, the business said it is increasing its annual spend on advertising to over £4m and is spending a further £4m on store improvements.
The retailer asked for its suppliers’ “support” and has invoiced them for marketing contribution on orders receipted from April 16 and orders placed up to March 17.
Drapers understands the contributions vary according to the size of the supplier’s account. The amount, which totalled several thousand in one case, will be deducted from their next payment.
One supplier said the demand was “unilateral and un-negotiated”.
The source added: “We feel we have no choice but to comply as we depend on their business. This is an all too common, unfair, draconian and bullying practice.”
A spokeswoman for The Original Factory Shop said: “Like other retailers, we request that our suppliers contribute to the company’s ongoing growth plans, and we are proud to enjoy long-term relationships with many of these, always aiming to maintain an open dialogue.”
The Original Factory Shop has 216 stores and stocks brands including Wrangler, Padders, Calvin Klein and Adidas.
Sales at the off-price retailer grew by 5.9% to £184.5m in the year to 27 March, while pre-exceptional EBITDA increased 6.3% to £15.1m. Gross margin increased from 45.5% in 2015 to 45.7%.