DIYWEEK.net

The British Home Enhancement Trade Association (BHETA) says a new demand by Homebase and Argos for an extra 2% turnover rebate from suppliers is "contrary to our efforts with major retailers, which is to work together".
BHETA chairman David Smyth told diyweek.net he had written to the two Home Retail Group (HRG) retailers after they sent letters to their suppliers telling them about the new condition.

In his letter, Argos commercial director David Robinson puts the reason for the rise down to the cost of the retailer's transition from catalogues to a digitally-led business.

He 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."

But Mr Smyth told diyweek: "We were particularly concerned because these tactics run contrary to our efforts with major retailers, which is to work together."

He said that when Homebase ceo Paul Loft spoke at last year's Global DIY Summit in Rome he had talked about working on a code of conduct on the partnership between suppliers and retailers - which was at odds with the message now being sent out by HRG.

Mr Smyth has written to both HRG companies and asked for a meeting with Homebase commercial director Paul Emslie, though has not yet received a reply.

"I've expressed the association's disappointment and concern that the letter was sent and said I would welcome the opportunity to discuss what the future holds," he said.

"We're all working in this industry together and I think this is a responsible response from us. There are a lot of our suppliers who are quite committed to Argos and Homebase, so we feel it's not conducive to good business relationships."

He said he obviously hoped to receive a positive response from the two retailers. "I'd like to think that it'll stop this kind of thing happening without having some sort of prior negotiation," he said. "Maybe we need to talk about terms and conditions and then suppliers can make a decision whether to have an open cheque or not."

He added that imposing an additional rebate on suppliers could have a major impact on some.

"When you deal with these huge retailers there isn't that huge amount of slack. They do work on tight margins and they do work on volume, and when you suddenly get this it could make a big difference to their business going forward and their investment. It's effectively getting suppliers to fund their growth programme which we think, on the face of it, is not on."

The Homebase and Argos letters ramp up the pain for suppliers by also informing them that the companies want to "discuss and agree with you proposed changes to the existing payment terms".

In a statement, Homebase told diyweek.net: "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."