Argos joins Homebase in hitting suppliers with 2% turnover rebate demand

Insight DIY recently reported on how Homebase had sent letters to suppliers demanding a 2% turnover rebate. It has since been reported that these demands are not restricted to the DIY retailer; they are also affecting suppliers of its sister company, Argos.

Argos and Homebase have demanded a 2pc rebate from suppliers in the latest example of Britain's leading retailers squeezing their supply chain.

The two retailers, which are owned by Home Retail Group, have sent almost identical letters to suppliers demanding a 2pc turnover rebate for orders placed on and from March 1.

In the letters, which have been seen by The Telegraph, the companies say they will also "take this opportunity to discuss and agree with you proposed changes to the existing payment terms".

According to its annual report, Home Retail already takes 60 days to pay its suppliers, one of the longest waits in the retail industry.

Argos and Homebase emerged as winners during the vital Christmas, reporting a 3.8pc and 4.7pc rise in like-for-like sales respectively.

Argos has committed £300m over the next three years to a turnaround programme, which includes installing click-and-collect points and replacing its famous laminate catalogue with digital touchscreens.

In Argos's letter to suppliers, David Robinson, commercial director, said: "As we travel along this journey, it is vital that both Argos and its suppliers play their part in supporting this transformation, and hence with effect from 1 March 2014, we will be amending our standard trading terms to include an additional 2pc turnover rebate for orders placed on or after that date."

The Forum of Private Business called on the Government to stop retailers using rebate schemes.
Alexander Jackman, head of policy at the FPB, said: "Small businesses are some of the great innovators in the UK.

"Sadly, more and more of their customers higher up the supply chain are increasingly innovative in methods to extract more money from them.

"Whilst interfering in private sector contracts is a tricky business, we are urging Government to find a way to stop these damaging rebate schemes.”

A spokesman for Home Retail said: "Our suppliers are very important to us. Payment is made in accordance with pre-agreed terms and reflects the markets in which we and our suppliers operate.

"Details of these agreements are commercially sensitive and therefore will not be disclosed."

Source : Graham Ruddick - The Telegraph
www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10617384/Argos-and-Homebase-demand-rebate-from-suppliers.html