Suppliers ordered to foot bill for Woolies' investing

Published on Monday 22 January 2007 11:51

STRUGGLING chain Woolworths has angered suppliers by demanding contributions for investment it has already carried out and also changing its payment terms.

The retailer wrote to its 700 suppliers to inform them it would deduct a "contribution" from its bill - while also telling them they may have to wait longer for payments in a bid to retain cash.

It is also believed Woolworths aims to axe around 100 of its suppliers in a bid to cut costs. At least one supplier has said it will voluntarily end its relationship with Woolworths because of the contribution factor.

Woolworths sent the letter last week, after chief executive Trevor Bish-Jones reported a 4.6 fall in Christmas like-for-like sales. Under the new plan, Woolworths will "harmonise" bill settlements into three bands - 45, 60 and 90 days - and, in some cases, increase the "settlement discount" it demands of suppliers to five per cent. Woolworths said: "We are having to invest in pricing and marketing and the changes we are making with our suppliers will enable us to continue that investment."

The news comes amid fears that Woolworths could close up to 200 of its larger stores.