In May, we revealed that Halfords had sent a letter to suppliers asking them to pay up to 10pc of their annual sales with the retailer to help fund its £100m turnaround plan.
This effectively amounted to a rebate on already agreed contractual payments. Suppliers claim it came with a warning that if they did not agree, they risked being delisted.
Matt Davies, chief executive of Halfords, was unapologetic about the letter, claiming that the retailer was “making sure that everyone carries their weight”. He argued that because Halfords’ investments in improving its stores would boost sales for suppliers, they should contribute.
However, suppliers saw it rather differently, with some fearing the demands would push them into the red. In the end, because Halfords is the largest bicycle and car parts retailer in the UK, most small businesses decided they had to stump up the cash.
It is not beyond the realms of possibility that a similar request was made to Tesco suppliers – perhaps in return for prime shelf space – and the company then booked all the rebates as income before suppliers had even agreed to it.
Unfortunately, Halfords is by no means alone in making these kinds of demands.
John Lewis – yes, even John Lewis – told suppliers last year they would be subject to a rebate of up to 5.25pc on annual sales. Again, it justified the letter by saying its sales were only rising due to spending on new stores, refurbishments and its growing ecommerce operations.
Last December, in perhaps the worst example, Debenhams demanded a one-off fee from suppliers worth 2.5pc of its outstanding payments and said it would apply a 2.5pc discount to orders it had already agreed with suppliers.
Argos and Homebase, which are owned by Home Retail Group, joined in on the act in February by applying a 2pc rebate to future orders.