Asda has asked suppliers for payments of hundreds of thousands of pounds in negotiations linked to its acquisition of Netto.
As Asda readied itself for a 12-week rollback across every category of up to 20%, to start 18 June, suppliers were called to meetings at Asda House to be told that the supermarket wanted the money because of the extra business they would gain by supplying the converted Netto stores.
One supplier said he had refused to pay the money, which amounted to 5% of his turnover from Asda. Margins were so tight, the sum requested several hundred thousand pounds was more than the profit he made supplying Asda.
The deadline to wrap up the talks was yesterday.
“They are living in a bloody fantasy land,” the supplier said. “We’ve had this before and it undermines the relationship between supplier and retailer. I expected some debate but I could not believe what I was hearing.”
Asda made the demand in a document called ‘New Space Opportunity’. It claimed Netto store sales densities would rise 40% under its ownership, saying Netto was “just the beginning of a growing supermarket format with a unique proposition: one national price, increased fresh foods, weekly shop”.
Another supplier said the sum requested was reasonable but wanted the extra volumes confirmed before agreeing a payment.
Asda said: “The addition of the Netto stores and our plans for growth inevitably require us to work with our suppliers to ensure a smooth integration that will benefit our customers and the wider community.”