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Suppliers outraged as Debenhams demands pre-Christmas discount

Debenhams clothing suppliers have slammed the department store retailer’s “audacious” discount demands.

This week Debenhams wrote to suppliers asking for a 2.5% discount as part of a “contribution” to help fund the retailer’s continued expansion. The retailer explained the funds would “support its commitment to ongoing investment” and said both parties will “mutually benefit” from the growth of Debenhams.

However, one supplier, who did not want to be named, said the retailer should have asked its shareholders for money rather than suppliers.

He said: “The thing that really gets me is the pure audacity of the whole thing. They don’t care.”

However, he explained that suppliers would find this demand difficult to refuse because Debenhams is a key customer for many of them.

Another supplier added: “When a retailer decides it is going to do something that isn’t to your liking then what can you do? How will you pay your rent next month?”

In the letter seen by Drapers, the chain stated that contributions will be based on each supplier’s current business with Debenhams in two ways. The first will take the form of a single discount of 2.5% on all outstanding payments on suppliers’ accounts at the end of the day on December 17. The retailer also demanded a discount of 2.5% on all open orders at the end of the day on December 17. Debenhams said these would be one-off contributions and not a permanent amendment to trading terms.

Another supplier said: “This has become a common practice with Debenhams over the last few years and we’re fed up with it now.”

The chief executive of one high street retailer said Debenhams had made the demand due to poor trading: “Everybody is doing badly and discounting heavily this season, so Debenhams’ usual cuts don’t stand out. A woman would rather buy something discounted at Hobbs rather than at Debenhams.”

Debenhams declined to comment.

Readers' comments (6)

  • Reaction to Debenhams' "request" of suppliers for a "contribution" is unsurprising.

    The choices open to a supplier in this situation are:

    1. pay up and accept the hit to its bottom line;
    2. engage in the game played in the US where some suppliers build in the "contribution" into the original price; or
    3. simply refuse and issue a statutory demand against Debenhams. On the publicly available facts, Debenhams will pay up but the supplier can expect to lose Debenhams as a customer.

    Stephen Sidkin
    Fox Williams LLP

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  • darren hoggett

    While Debenhams behaviour is what you would expect from them, it shows that as a supplier, you should never rely too heavily on one store.

    One would hope all the suppliers affected will tell Debenhams to stick it where the sun doesn't shine, but I would expect them to cave in as per usual.

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  • Mark Ashton

    For its full-year reported in October, their pre-tax profits fell 2.7%, say no more.

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  • Is the root cause owing to their brand suppliers giving more focus to online and cutting out the middle man that is Debenhams? (Maybe not cutting out, but certainly repositioning investment and focus?)

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  • Good suppliers that are innovative and bring more than just manufacturing to the table can move on from Debenhams, many many have, this has resulted in poor product with ranges bought for discounting, the only way that Debs knows to shift stock, it's a downward spiral, Debs is now a shadow of it's former self before the asset strippers came in, went, and left the bones along with a discount mentality that the current management similarly adopt, however with on line mark downs so prevalent even this way of trading is looking tired and dated.
    With 120 day payment terms in place with most suppliers it looks like a bumper pay out for Debs this Christmas. Suppliers do have a choice, to slowly realign there account base, the good suppliers have already done so even more will do this in the coming Year, in the long wrong its Debs who will suffer not the supplier.

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  • Ground hog days, we walked away when we were forced to 120 days, best decision we ever made, the suppliers left really have no cause for complaint, this is almost an annual harvest now for Debs. As already mentioned above, the ranges are shocking, some of the offer in BHS is better and that's saying something ! all the suppliers with any added value in terms of design have left. I look forward to NY when hopefully there will be a takeover and the cull of the dinosaur's that are responsible for the buying and merchandising starts, the only issue any new owner will have is the brand, it almost needs taking from above the door and renaming it's that far gone.

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