Hard bargaining from Co-op

Posted on 2 Jun 2009 by The Manufacturer

The Co-operative Retail Trading Group – self-styled as “good for everyone” – is reportedly seeking longer payment terms and improved contracts from its suppliers.

Foodmanufacture.co.uk (FM) is reporting that the brand is seeking to share some supposed cost savings that suppliers could potentially be benefiting from following the Co-op’s buyout of rival supermarket Somerfield in £1.6bn deal last year.

One supplier of both shops told the website that his company is being pressured into poorer terms without gaining any benefits from the move. “While we will in future only have one account to handle and one head office to visit, there are no immediate ‘synergy benefits’ for us from this deal. It’s possible that if they consolidate the supply chain we might see some very small benefits well down the line, but right now the ‘we’re bigger and stronger now so give us better terms’ argument doesn’t stack up.”

However, in a poll run by FM, 69 per cent of respondents thought the merger of the two supermarkets did in fact constitute good news for suppliers.

A Co-op Group spokeswoman said: “We do not comment on speculation about confidential negotiations with suppliers. However, I can confirm that the Society does not impose standard payment terms on its suppliers but agrees terms separately with each of them.”

Do you supply either or both Somerfields and Co-op? Can you add anything to this story, based on your experiences or your predictions? Email [email protected].