Blog: Leonie BarrieTesco’s suppliers pay the price

Leonie Barrie | 29 October 2008

Tesco is driving harder bargains with its non-food suppliers, purportedly to help customers battle their way through the credit crunch in the run-up to Christmas.

The retail giant confirmed to just-style that it is extending credit terms from 30 to 60 days – which means suppliers will now have to wait twice as long for payment.

The implication is that this is an opportunity for both the retailer and its suppliers “to do even more for customers.”

But could the real reason be that Tesco is fearful of a shrinking market share? It emerged today that the firm has slashed internal UK sales targets, and expects like-for-like sales growth of 2% – just half of its usual guidance of 3-4%.

The timing of the payment terms, which are due to kick in on 1 December, will mean Tesco has millions of pounds of extra cash available in the final weeks of the year to spend on promotions to entice shoppers into its stores.

 

UK: Tesco alters non-food supplier payment schedules


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