Argos and Homebase demand 2.5% supplier rebate

The retailers, both owned by Home Retail Group, sent almost identical letters asking for a 2% turnover rebate on orders placed on and from March 1.

Argos and Homebas are also proposing changes to their payment terms. It currently takes 60 days to pay its suppliers.

One Argos supplier told Retail Week the move “smacks of desperation”. He added: “You can squeeze suppliers for short term gains but we’ll just quote higher prices next season.”

Home Retail is the latest retailer to attempt to squeeze its supply base. It emerged last week that N Brown has demanded a 2.5% rebate from spring 2012 until present to fund its ambitious growth plan. Debenhams also asked for a 2.5% discount to “support its ongoing investment” in the business before Christmas.

Argos is ploughing £300m into its turnaround programme that includes a new digital store format, which replaces its famous laminated catalogues with iPads and is investing in digital initiatives.

The turnaround has also garnered results. Home Retail pre-tax profit jumped 53% to £27.4m in the 26 weeks to August 31 and both Argos and Homebase emerged as winners during the Christmas trading period.

Argos commercial director David Robinson said in the letter: “As we travel along this journey, it is vital that both Argos and its suppliers play their part in supporting this transformation, and hence with effect from 1 March 2014, we will be amending our standard trading terms to include an additional 2% turnover rebate for orders placed on or after that date.”

A spokesman for Home Retail said: “Our suppliers are very important to us. Payment is made in accordance with pre-agreed terms and reflects the markets in which we and our suppliers operate. Details of these agreements are commercially sensitive and therefore will not be disclosed.”