The strategy was unveiled as food suppliers were issued with ‘non-negotiable’ demands for a 1.25% discount off invoice prices from September 1, increasing to 2% in April.
The price of tray hire - for suppliers using returnable packaging - will also go up 25p.
The move is part of a strategy to cut buying prices across the whole business by £100m a year.
One supplier said: “This is not a case of a business growing by 5% or giving us new listings. This is a case of ‘We want your money and we are taking it’. This must be right up to the code of practice and its definition of reasonable. If everybody did this, where would we be?”
The demands came as new chief executive Stuart Rose warned M& S Food could lose its point of difference in the market if it didn’t get back to what it did best. In what one supplier described as a “very frank and honest presentation” at the chain’s food supplier conference, Rose warned that Marks and Spencer had taken its eye off the ball, concentrated too much on quantity rather than quality and risked losing its competitive edge.
M& S had been expecting to launch about 1,000 new products during the year, which would generate about 10% of sales, added the supplier. Instead it had introduced 1,400 new lines that had in turn only generated 6% of overall sales.
He added: “There is too much duplication. The aim is to rationalise the range by up to 20% and do more focused npd and promotions.”
There would also be a focus on reducing wastage and improving on-shelf availability. While Rose did not make any announcements about Simply Food, he admitted some of the new stores had significantly cannibalised sales from existing outlets, said another supplier.
“Rose said Simply Food had to stand up on a capex basis. I guess they are looking at it store-by-store.”
One senior executive at a rival food retailer said the chain had not chosen sites very wisely and was now saddled with stores that were not delivering great returns in areas where rents were as high as £35 a square foot on five and 10-year leases.
He added: “M&S has a reputation for quality, but with c-stores in some cases just a few hundred yards from a 20,000 sq ft supermarket, they don’t have the depth of range to compete.”