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.