Leading suppliers to Marks & Spencer have hit out at the retailer for failing to deliver increases in sales volumes promised under the terms of its Project Genesis.
The controversial scheme – earlier dubbed ‘Project Genocide’ by one supplier – came in for fresh criticism as the full effects of a 5.9% fall in like-for-like sales announced earlier this month were felt by suppliers. Having announced price cuts of at least 3.5% in return for higher volumes, these had not materialised.
“You need to supply more volume to deal with cuts to your margin,” said one supplier. “The reality is we’re screwed to the ground by retailers on price and we’re making no money. A lot of retailers including M&S think it’s a ploy. But we’ve seen more than 20 manufacturers in our market go out of business in the last year because there’s no money.”
Another added: “We are very disappointed. We were led to believe we’d benefit from the new scheme. On the contrary, our situation is even worse.”
Fresh meat was a particular concern for retailer and suppliers alike, as sales fell sharply, down 28.9% (28.1% by volume) year-on-year in the 12 weeks to 10 August [TNS], more than any other major retailer. A source close to M&S called it an “amazing drop” that did not bode well as meat was “a key performance indicator of the overall health of the business”.
“Project Genesis has not exactly been a hit either for suppliers or the retailer itself,” said a food industry analyst. “Marks & Spencer has got to be concerned about the security of its supply chain. Margins for some of its suppliers are so low, there’s a risk they could do what Northern Foods did [in the negotiations over ready meals at Fenland Foods] and walk away from the table.”
Earlier this month, M&S said cost increases had been kept lower than expected. It also warned that cost savings gained from suppliers had been more than offset by efforts to improve value.
The controversial scheme – earlier dubbed ‘Project Genocide’ by one supplier – came in for fresh criticism as the full effects of a 5.9% fall in like-for-like sales announced earlier this month were felt by suppliers. Having announced price cuts of at least 3.5% in return for higher volumes, these had not materialised.
“You need to supply more volume to deal with cuts to your margin,” said one supplier. “The reality is we’re screwed to the ground by retailers on price and we’re making no money. A lot of retailers including M&S think it’s a ploy. But we’ve seen more than 20 manufacturers in our market go out of business in the last year because there’s no money.”
Another added: “We are very disappointed. We were led to believe we’d benefit from the new scheme. On the contrary, our situation is even worse.”
Fresh meat was a particular concern for retailer and suppliers alike, as sales fell sharply, down 28.9% (28.1% by volume) year-on-year in the 12 weeks to 10 August [TNS], more than any other major retailer. A source close to M&S called it an “amazing drop” that did not bode well as meat was “a key performance indicator of the overall health of the business”.
“Project Genesis has not exactly been a hit either for suppliers or the retailer itself,” said a food industry analyst. “Marks & Spencer has got to be concerned about the security of its supply chain. Margins for some of its suppliers are so low, there’s a risk they could do what Northern Foods did [in the negotiations over ready meals at Fenland Foods] and walk away from the table.”
Earlier this month, M&S said cost increases had been kept lower than expected. It also warned that cost savings gained from suppliers had been more than offset by efforts to improve value.
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