Northern Foods has defended its decision to ask its suppliers for a 5% price reduction on goods and services supplied across the business.
The reduction will be imposed through an automatic discount applied to all orders placed on or after June 1, and is part of chief executive Pat O’Driscoll’s strategic review of the business since joining last March.
Communications director Hilary Baker explained: “We are operating in a highly competitive market with pressure to keep prices low from our own customers as well as coping with inflationary pressure.”
She pointed that, until now, Northern Foods had been absorbing these costs, but that this was no longer sustainable.
The company is having to cope with a 2.5% price reduction of its own from its biggest customer, Marks and Spencer.
The letter has caused anxiety for suppliers, many of whom are trading on small margins and facing similar pressures from their own retail customers.