Suppliers under pressure as value retailer hardens its stance in review of buying terms.
High street value retailer Wilkinson has confirmed to DIY Week that it has embarked on a series of one-to-one meetings with suppliers to review its trading terms. And for some suppliers it seems this includes a request for substantial cash contributions to fund the company's expansion plans.

One supplier told DIY Week that they had been asked to make an "unconditional payment" and that, "those suppliers that made the payment would be looked upon favourably and those that didn't, wouldn't." However, the supplier continued, no assurances were offered in return.

A spokesperson for Wilkinson told DIY Week: "Wilkinson can confirm that, following a full review of its supply arrangements, the company is reviewing its trading terms with all of its suppliers.

"Our relationships with suppliers large and small are important and play a significant part in our success as a value retailer of quality products. It is in our customers' interests that we offer them the best products at the best price, sourced from suppliers best able to help us achieve this. Our discussions with suppliers are a positive and joint process to ensure we can continue to achieve best value for our customers through leveraging Wilkinson's growth.

"Our buying teams are currently engaging in one-to-one discussions with all our suppliers and until those discussions have been completed, we don't think it would be appropriate to comment on the detail of the new arrangements."

It is well documented that Wilkinson plans to increase its store portfolio to up to 500 by 2012. The company saw sales rise 6.2% for the full year to January 30 2009, with 26 stores added in the period and 15 more planned for the current financial year. However, operating profit dropped 35% from £48.8m to £31.6m in the same period.

The current economic climate and its effect on consumer confidence and behaviour have meant that the discounters are taking market share from mid-range and premium competitors. It makes sense that, in the vacuum left behind by Woolworths and with so much prime retail space on the UK's high street still up for grabs, now is a great time for well-placed businesses to grow.

However, it appears that Wilkinson is leaving behind it's previous strategy and image and adopting a far more aggressive approach than it has previously, in line with the larger multiples and supermarket chains.

One supplier who had been approached for an unconditional payment told DIY Week: "This style is very uncharacteristic of Wilkinson historically. Wilkinson have always played hard, but they always played absolutely straight, which I admired. That's why this new tactic was so surprising."