Written by: Keith Tully
Published: 21st January 2016
Holland & Barrett, the health food retailing giant, has drawn criticism from a variety of sources for what some people are characterising as tactics based on bullying its suppliers.
The controversy arose after it emerged that Holland & Barrett’s suppliers recently received a message from its chief executive Peter Aldis demanding price cuts and a more substantial contribution to its investment plan.
Remarkably, the note to suppliers also asks them to cover the costs associated with a new security tagging and CCTV system that Holland & Barrett is looking to implement.
Representatives of the Forum of Private Businesses (FPB) have been strong in their criticism of the retailer’s attempts to oblige its suppliers to cut their prices.
Ian Cass, the support group’s managing director, told the BBC: “I am surprised at the unwholesome attitude of Holland & Barrett.
“Many of their suppliers are small firms who have helped the retailer increase their margins and have been unable to put up prices themselves over the last few years.
“Sometimes it is helpful to suppliers to offer discounts to retailers in return for product placement or increased marketing of their products, which is beneficial to both parties, but this needs to be agreed by both sides, not a unilateral decision as in this case.”
In his communication to suppliers, Mr Aldis noted that his company was able to increase turnover by 11.7 per cent over the course of 2015.
He also explained that the company intends to continue its strategy of investing for the future but said that “suppliers have not been contributing proportionately to the growth of the business”.
“When there has been little or no inflation, a general fall in food prices and fuel costs at their lowest prices for more than a decade, we have seen our margin eroded substantially by increased product costs,” Aldis’ letter apparently read.
The retailer said it wants to see a 5 per cent reduction of costs from all its suppliers.
The FSB has condemned Holland & Barrett’s policies in this context as amounting to a “smash and grab raid” on smaller operators within its supply chain.