High street fashion and homeware retailer Laura Ashley has come in for criticism from a business group for putting the squeeze on its suppliers.
The chain has allegedly sent many of its suppliers letters asking for an “immediate” cost price decrease. The correspondence asks for a ten per cent cost reduction, and has reportedly been sent to cover existing orders.
The chain, which has eleven stores in Scotland, has not denied sending the letter, releasing a statement to the BBC saying:
“We work closely with them (our suppliers) to deliver the right products at the right prices for our customers and are having ongoing positive conversations with all our suppliers to ensure we keep doing this.”
However, the Forum of Private Business (FPB) has said the action is lazy. Going on to say that asking suppliers to cut their prices could be destructive, the business support group said:
“It probably means in many cases the supplier is making no profit or even operating at a loss.”
With many retailers also holding payments for invoices, it is clear that pressures are mounting. In Scotland though, and throughout the UK, many firms are taking action. Implementing invoice factoring and discounting facilities, they are boosting cash flow without further incurring credit.
The latest move by the group comes just weeks after the FPB hit out at the John Lewis Partnership. Following record profits being posted, it was announced that the staff-owned company has a rebate policy in place for its concessions that lift their sales through John Lewis stores.