John Lewis 'abusing' supply chain with rebate demand.

John Lewis 'abusing' supply chain with rebate demand


The department store chain John Lewis - praised by the Government as a model
British business – has been accused of “abusing” its supply chain by demanding a
rebate from suppliers enjoying an increase in sales.









John Lewis announced last week
that it was paying a staff bonus of more than £200m for the first
time Photo: Christopher
Pledger




By Graham Ruddick

9:30PM GMT 11 Mar 2013

49 Comments




In a letter seen by The Telegraph, John Lewis said suppliers will now
be subject to a rebate of up to 5.25pc on annual sales with the retailer because
it needs “all parties to participate in showing their ongoing commitment and
support”.


The Forum of Private Business said the scheme was “outrageous” and accused
John Lewis, which is owned by its employees, of being a “bully”.


Last week, the John Lewis Partnership reported a 16pc increase in pre-tax
profits to £410m and paid out a bonus of more than £200m to its employees. The
Partnership also owns upmarket supermarket Waitrose.


In the letter to suppliers, John Lewis said its “exceptional” sales
performance is due to investment in new stores, refurbishments, and its growing
ecommerce operations.


“By providing this platform for growth, our suppliers have in turn benefited
from increased profits levels through efficiencies provided from the increase in
volumes,” the retailer said. “It is therefore essential that the collaboration
shown to date is continued and that John Lewis and its suppliers share the
benefit created from these significant growth opportunities.”



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The “growth rebate” scheme, which takes effect from the start of last month,
ranges from a 0.75pc reduction on the value of a suppliers’ annual invoice with
John Lewis if their sales grow by between 5pc and 9.9pc, to a 5.25pc rebate if
sales grow by more than 50pc.

A spokesman for the FPB said: “What a way to treat your suppliers, who are
effectively having their pockets picked by John Lewis on the back of strong
trading. It’s a win-win for John Lewis all the way.

“This isn’t an either/or situation for suppliers – it’s put up and shut up.
This really is a case of John Lewis the bully.”

On Monday night, John Lewis said it had written to a “small number of
suppliers”, thought to be around 130, to “discuss bringing their commercial
agreements in line with the rest of our supply base”.

A spokesperson for the department store chain said: “We create partnerships
with our suppliers with the intention of mutual growth and sharing the proceeds.
The intention at all times is to develop a long-term business with benefits for
our Partners and a sustainable growth opportunity for our supply base.

“All commercial agreements are confidential and are discussed and debated
individually. As ever, a supplier retains the right to discuss all aspects of
their commercial agreement with us and whether it is profitable for them to
supply us.”

The discovery of the John Lewis letter, which was sent on February 22, comes
after Debenhams informed some suppliers that it intends to cut prices by 2pc and
delay payments from 90 days to 120 days.
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What a greedy Chairman of John Lewis is!!!!! The charging £2 for looking through a window overlooking the Olympic Stadium was bad enough. Obviously the Suppliers are doing a good job or John Lewis wouldn't be making such huge profits, Debenhams too is holding suppliers to ransom.