Iceland CEO Malcolm Walker has told The Grocer a decision by the retailer to extend its payment terms to 90 days and introduce a 2.75% "settlement discount" for paying on time was "nothing to do with me".
The frozen food chain's holding company - Icebox Holdings - wrote to suppliers on 29 November notifying them of the changes, to be implemented on 1 January. The letter, signed by Icebox CFO Tarsem Dhaliwal, said they were part of a "harmonisation of supplier payment terms across the business".
It added: "You do not need to take action."
However, the move has enraged suppliers. One, which did not wish to be identified, said most suppliers to Iceland were currently on 45-day payment terms with no settlement discount. Smaller companies, in particular, could find the dramatic changes "crippling", he warned, adding: "If you're a highly leveraged company, and Iceland is 40% of your business, then you're going to be worried."
The boss of another supplier, a major company in the frozen sector, said he would even consider stopping supplies to Iceland. "Our position is that we are not going to accept it. A 3% discount on our prices is a not insignificant cut into our margins. At a time when our costs are rising, prices should be going in the other direction."
But Walker - who is also a director of Icebox Holdings - appeared to wash his hands of the matter this week, telling us: "It's nothing to do with me. It's a group-wide initiative." He declined to discuss the issue further.
Several suppliers have written back to Icebox rejecting the changes in terms. In a letter of response, Dhaliwal wrote: "The intention of [the initial] letter was for notification purposes only. However, given the closeness of our business relationship, we are prepared to meet with you to clarify these changes. You will receive a call within the next 24 hours to arrange a time."
Despite Walker's reticence, his colleague at Iceland, marketing director Nick Canning, was more forthcoming. He insisted the changes would simply bring Iceland into line with its "peer group".
He added: "We haven't reviewed our terms for some years. Given our growth and successful performance over the past three years we wanted to introduce a consistent and fair approach. This isn't a case of anything untoward. Suppliers who have been with us in the past two or three years have seen big growth and done well."
Canning said Iceland was prepared to discuss the changes in terms with suppliers who opposed them. In the first instance, they should use an email address cited in the first letter from Icebox.
Some suppliers have approached their trade body, the British Frozen Food Federation. However, Iceland is also a member, which means BFFF is powerless to intervene.
The episode is likely to intensify calls for the Supermarkets Code of Practice to be tightened and extended to cover retailers other than the big four. The code, which does not apply to Iceland because it has less than 8% of the market, says changes can only be made by retailers to terms with "reasonable notice". However, the notice period remains undefined.