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Row grows between Mark Two and Tesco over kitchen exit

A bitter row has broken out between Bolton-based distributor Mark Two and major customer Tesco following the retailer’s decision to close its kitchen and bathroom operation.

 Mark Two claims that, although Tesco informed it of its decision a year ago, it has since “refused to engage” with it over a possible solution.

Hundreds of orders remain outstanding and Mark Two believes around 200 jobs in the Bolton area are now under threat.

However, Tesco has emphatically denied claims that it has avoided engaging with Mark Two, countering its argument by saying that it had “concerns” about their ability to fulfil orders. 

In a statement on its website, Tesco claims Mark Two is holding all customer deposits and payments and is legally responsible for honouring all outstanding customer orders, warranties and supplier payments. “It is our belief that they will not be fulfilling those obligations,” the statement read. “As a result, we have taken the decision to step in and do the right thing for customers.”

Tesco said any customers who have paid a deposit for work that has not yet started should contact them for a full refund.

But amid an escalating tit-for-tat battle between the two companies, Dave Cullen, chief executive of Mark Two’s parent company Ultra Finishing, told BBC Radio Four show ‘You and Yours’ that Mark Two had been trying to negotiate with Tesco “for months” to try to come to an amicable wind-down plan that wouldn’t affect consumers.

“They haven’t taken us up on any of our proposals,” Cullen said, adding that the original contract with Tesco had been “unduly onerous” and Mark Two could not complete the outstanding customer jobs as, despite holding customer deposits and product, they did not have the cash to pay for fitting.

In a further statement, Mark Two confirmed it had built a strong relationship with Tesco since 2008 and had served more than 11,000 kitchen and bathroom customers.

“About a year ago, Tesco informed Mark Two of its intention to exit the kitchen and bathroom market,” it continued.

“Since March 2014, Mark Two has contacted Tesco more than 100 times, with little response, to seek a mutually satisfactory solution that would protect our joint customers. Mark Two sincerely regrets the inconvenience to customers caused by Tesco’s  sudden termination of its contract with us."

“Mark Two is proud of its strong customer and business-to-business track record and believes it is uniquely placed, thanks to the time it’s already invested in planning for the logistics of supplying and fitting the kitchens and bathrooms with bespoke parts, to honour customers’ orders in the run-up to Christmas. Mark Two hopes Tesco will work with it to ensure customers get the kitchens and bathrooms they have paid for.”

Tesco’s statement follows months of bad publicity surrounding its kitchen and bathroom operation, including a damning review during an episode of the BBC’s consumer watchdog programme ‘Don’t Get Done, Get Dom’. The show suggested Tesco had masked the fact that its kitchens and bathrooms were being supplied and fitted by Mark Two.

A highly critical Facebook page has also been set up online entitled ‘Tesco Kitchens/Mark Two a travesty’.

The news comes  after Mark II Distribution was sold to bathroom product supplier Ultra Finishing, for an undisclosed sum in June 2013.

The deal saw Burnley-based Ultra become one of the largest kitchen and bathroom suppliers in the UK.

All brands are sold by Ultra’s existing route to market, through retail and distribution. However, the intention was to make the home selling division of Mark Two into a standalone business with Tesco as its main customer.

The loss of the Tesco business represents a further blow to Mark Two, which came close to collapse after the demise of MFI in 2008, but was saved when it became a significant investor in a new plumbers merchant, Clifton Trade Bathrooms. It also won contracts to supply Wickes, Dolphin and Focus, which together accounted for between 60 and 70% of its business and turnover.

However, the economic situation worsened for the distributor two years later when, under the new ownership of Travis Perkins, Wickes took its bathroom business, which was worth around £9 million to Mark II, in-house. Shortly after, both Focus and Dolphin went out of business.

Meanwhile, in a further development, retail chain Bathstore has extended an offer of assistance to Tesco customers affected by the situation. Every Tesco bathroom customer whose order can no longer be fulfilled is being offered 10 per cent off orders, plus an additional £250 off installation. Bathstore has also set up a helpline to offer product advice to any dissatisfied Tesco bathroom customers.

Source: KBB Review.com.

Read the full news article here.

16 November 2014

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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

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Martin Elliott. Chief Executive - Home Hardware.
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