Suppliers Squeezed By New Managements

Arcadia, Debenhams and GUS Home Shopping amongst others, have all demanded extra discounts from their suppliers after takeovers by private investors. Changing business terms, especially demanding a retrospective discount, has become a standard way of wringing extra cash out of a retail acquisition.

But Debenhams is also making demands of big-name brands and substantial concession operators. There is a sense that by lengthening the payment terms - expected to average around 60 days against just under 30 days in 2002 - and demanding such a large price cut, the department store's new management has taken a step too far.

Suppliers are now looking at how they can change the way they work with high street stores. Suppliers can further protect themselves through a long-term agreement with the retailers, or by standing together as a core group as they will have bargaining power. At worst a store will refuse to do business, but with outside brands lending credibility to the department store's offer, this would be a blow to its high street appeal.