Retailer angers suppliers with demand to share waste costs

01 June, 2007

Asda puts onus on supply chain to split cost of shoplifting and breakages

Drinks suppliers have reacted indignantly to retailer demands for them to share the costs created by shoplifting, breakages and other waste.

Asda's beers, wines and spirits department has contacted suppliers and told them that all such costs will now be split 50-50.

The e-mail says: "We have had unacceptably high levels of store waste in 2006 which is a significant cost to Asda. As a result we are eager both to see suppliers being pro active in reducing the waste on the lines they supply and to ensure we receive a contribution to the waste cost that we do incur."

It adds that shrinkage - defined as "unrecorded waste caused by theft, incorrect item file maintenance etc" - was surprisingly high and suppliers are now required to make a quarterly payment to cover half of these costs.

Suppliers criticised Asda's directive, which coincides with an e-mail from Waitrose demanding retrospective payments to fund a "new lower price" strategy on key lines. Suppliers who do not comply "will be subject to a delist," according to the message.

One supplier said the initiatives were the work of accountants, not buyers.

"The buyers are basically human beings and spend years of their time building up a relationship with the supplier base, and this is just the kind of thing that will set it back at the speed of light. It's unbelievable. Where does it end?" said one.

Another said similar initiatives come up "reasonably regularly" and retailers were simply testing the water to see if they could extract more money.

Waitrose said it was committed to paying fair prices to suppliers but was adjusting retails that were out of line with the market.

Asda was unavailable for comment.

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