H&B Highcross

Source: H&B

The changes apply to 13% of Holland & Barrett’s supply base

Holland & Barrett has postponed controversial changes to supplier payment terms after furious backlash from some of its supply base, The Grocer has learned.

As exclusively revealed by The Grocer, H&B emailed suppliers on 15 March notifying them of planned changes to their payment terms set to come into effect by early May.

It included the implementation of a quarterly rebate equivalent to 2% of the cost of goods stocked, as well as significant increases in the time invoices would be paid, and the amount charged for suppliers to access EPoS data.

The “ridiculous” changes – which affected around 13% of H&B’s supply base – were heavily criticised by some affected brands, who claimed they would effectively be forced to pay thousands more per month to continue to list with the retailer.

At least two suppliers contacted by The Grocer had responded to the original email flatly refusing to pay the proposed new fees. It’s understood, however, that a number of the affected companies had contacted buyers expressing concerns about the proposed changes.

Holland & Barrett responded to brands on 28 March confirming that it was temporarily postponing the implementation of the changes, while it worked with suppliers to find a solution.

In a copy of the blanket email seen by The Grocer, H&B emphasised that it had listened to “feedback” from brands and would “further consider” the changes accordingly.

Buyers from the company would contact suppliers to discuss the changes. H&B would not make any changes until those conversations had taken place, the email said.

The retailer emphasised that the proposed changes were intended to support investment in customer and store experience, which would have “mutual” benefits for suppliers, as well as H&B. It also added the changes to EPoS charges had been intended on an opt-in basis, H&B said.

“Holland & Barrett has proposed certain changes to our suppliers around commercial terms and access to our EPoS data subscription service,” an H&B spokeswoman said.

“These are intended to support the efficiency and resilience of our supply chain, and support investment in our customer experience.

“Our relationship with our suppliers is very important to us and we are committed to working through any changes in partnership with them,” the spokeswoman added.

H&B had been rebuilding trust among suppliers

The saga is the latest in a string of fallouts between the retailer and its supply base over recent years, in the period leading up to the deal by owner LetterOne to buy out £700m of H&B’s debt in November 2022.

The retailer had promised to improve the way it communicated with suppliers following the relaunch of its food category in September, and there was a sense externally that H&B had generally begun to rebuild trust and reputation among its supply base.

A particular shared point of frustration among affected suppliers who spoke to The Grocer following the initial communication of the proposals was the blanket nature of the email, and the short notice given of the planned changes, which would have a major effect on small businesses. 

“This feels like the kind of thing the old Holland & Barrett management team would have done years ago,” one supplier source said last week.

“I thought the new team were better than sending a group email seeking to impose a cost cut without having spoken to any suppliers. At a time when food inflation is still high and we are absorbing it, this feels harsh.”