Holland & Barrett‘s Chief Executive Peter Aldis has demanded cost reductions from suppliers and reprimanded them for not “contributing” enough to the growth of the business.
The Forum of Private Business, a small business lobby group, labelled the move as a “smash-and-grab raid”.
Aldis wrote to the health and beauty chain‘s suppliers demanding a 5% reduction in their bills, as well as further “invoice adjustments and/or free stock” to pay for a £3m investment designed to tackle shoplifters. This was in addition to a “12.5% retrospective discount” that it brought in last year for stock earmarked for export.
He wrote: “During 2015, we increased turnover by 11.7% – a continuation of 26 quarters of consecutive growth in our business. This was driven by a range of new business initiatives and b our internal investment. For example:
. £47m in additional or improved space and new omni-channel systems
. £23m in customers rewards, increasing loyalty participation to over 70% of transactions with more than 7m active customers
. £21m in marketing expenditure to drive footfall
Our intention is to increase this investment during 2016 and create more opportunity for our suppliers. However, suppliers have not been contributing proportionately to the growth of the business. Indeed . . . when there has been little or no inflation, a general fall in food prices and fuel costs at their lowest prices for more than a decade, we have seen our margin eroded substantially by increased product costs.”
Ian Cass, of the FPB, told the BBC he was “surprised at the unwholesome attitude” of Holland & Barrett.
A spokeswoman for Holland & Barrett said: “We have made significant investments over recent years to drive the growth of the brand. This . . . is not the start of a negotiation process but a further part of this growth strategy.”