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B&Q facing supplier 'pay-to-stay' claims

B&Q Warehouse 2

B&Q is facing claims that it threatened its suppliers by demanding they pay hundreds of thousands of pounds to stay on its books.

The DIY giant approached companies demanding contributions to an “investment-for-growth” programme, an investigation by The Times has revealed.

One supplier described the move as a “massively underhand cash grab”.

The retailer, which is owned by FTSE 100-listed Kingfisher, has taken a harder line with its supply chain after the appointment of Darren Blackhurst, the former Asda and Tesco executive, as its commercial director last year.

Suppliers, who spoke to The Times on condition of anonymity, said that they had been subjected to verbal “pay-to-stay” demands amounting to as much as a tenth of their turnover with B&Q.

The requests were described by the DIY chain as designed to help it to discount products and to “share in their growth”.

However, suppliers said that the requests came with the threat that those that did not acquiesce risked being struck off their supplier base.

One supplier, who likened B&Q’s actions to blackmail, said that his company’s requests for the verbal demands to be repeated in writing were rejected. “It’s not our job to pay for their investment. The fact they can’t give anything in writing shows how shockingly inappropriate this behaviour is for a listed company.”

He added that it was made “abundantly clear” that failure to pay would result in B&Q delisting them and finding an alternative supplier. “It was, ‘if you don’t do it, you can’t supply us’.”

However, B&Q said that no suppliers had been delisted as a result of the programme, which began last May. Any “savings” that came from the supplier payments were not used to boost Kingfisher’s cash position, but were instead “passed on to customers”.

The Forum of Private Business and Federation of Small Businesses told The Times that they had been contacted by suppliers who were outraged by B&Q’s actions.

Both accused B&Q of hypocrisy, given that Kingfisher is a signatory of the government’s prompt payment code, a commitment to fair treatment of suppliers. Phil Orford, chief executive of the forum, questioned whether the retailer should be allowed to remain in the scheme. Mike Cherry, policy chairman of the FSB, said: “They appear to be holding their supply chain in contempt.”

In December, Premier Foods scrapped a similar pay-to-stay scheme after protests by suppliers, business groups and politicians.

In a separate development which will heap further embarrassment on B&Q, the owner of a business which collapsed four years ago due to consistently late payment of his invoices is threatening legal action against Kingfisher.

Terry Clark said that says his company, TWC, was forced out of business as a direct result of B&Q’s “horrendous” payment performance.

A spokesman for B&Q said: “Our suppliers are very important to us and we are naturally disappointed to hear that a small number are unhappy.

“The vast majority of our suppliers have seen material increases in sales volumes as a result [of investment for growth]. B&Q is an ethical retailer. If people have genuine grounds for concern then we would really like to address them and offer a private meeting with senior management to do so.

“We are sorry about the administration of TWC. In some cases, the success of their business is beyond our control.”

Source : James Hurley - The Times

27 February 2015

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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.

Martin Elliott. Chief Executive - Home Hardware.

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