The £17 Million squeeze?

According to Retail Week "Debenhams has written to a number of suppliers demanding a 2 per cent cut in the price the department store pays for goods. Bhs, Arcadia and Marks & Spencer have all made similar moves to get better terms from suppliers."

That probably equates to a full 1 percent hike in Gross Margin if they can achieve it which on sales of £1.7 billion would equate to £17 million if it was successful across the board!

So have Debenhams buyers been being ludicrously generous to these suppliers in the past? I find that hard to believe, but if not and the previous deals were fair to both sides, then you have to ask if this is a viable long term strategy. as it relies on the suppliers still being around to deliver the stock doesn't it ;-)

Of course you might argue that in the face of constant retail price deflation they are just sharing out the pain.

You have to wonder how long we can expect to see men's trousers being sold for less than £5 though.