Morrisons has launched a fresh wave of tough negotiations with its suppliers as it looks to mitigate falling sales before its financial year end.
Suppliers told The Grocer this week that they were angry as the latest demands come just six months after the previous round, when Morrisons set out plans to source greater volumes from fewer suppliers, asking for discounts of up to £0.5m in the process.
“They told us at the time this would be a one-off, but now they are back looking for more,” said one chilled supplier. “I think they are trying to improve their bottom line but this can’t go on.”
Another chilled produce supplier currently going through the negotiation process described it as a “frustrating start” to the new year. “It’s disruptive to category development and means however hard we try to develop a useful partnership we remain in a purely transactional one,” he said.
Morrisons’ year end is 3 February and some analysts are even predicting it could be forced into issuing a profit warning. This week, Morrisons revealed a 2.5% fall in like-for-like sales for the six weeks to 30 December. Total sales fell 0.9% over the period.
Asked about the reasons for the negotiations, a Morrisons spokesman said it wouldn’t comment on relationships with suppliers.
One supplier who refused to play ball last summer argued that simply making demands of suppliers would be futile in the long-term but also warned that “suppliers that give in to these demands almost deserve what they get”.