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Tesco delays payment to publishers

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Tesco delays payment to publishers

Supermarket asks for 60 days credit period for non-food

Tesco has extended the time it takes to pay entertainment suppliers by 30 days in the run-up to the Christmas season.

The supermarket has written to suppliers to tell them it has changed its payment terms from 30 days to 60 days as of December 1st, 2008.

The Financial Times reported that it had seen a leaked letter from Tesco finance director Eamonn O'Hare that said the decision was the result of a "detailed review of our non-supplier [sic] terms, with the aim of improving consistency, transparency and efficiency across our non-food supply chain".

In a statement, Tesco said: "This is a move to align payment terms for our larger non-food suppliers across the Tesco group which currently vary from country to country and within product categories.

"We have written to suppliers to seek their agreement to the change and hope to implement it before the end of the year."

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The move is part of a global review, the grocer added.

However, the FT speculated Tesco planned the move to free up millions of pounds in capital for the Christmas period.

:P

posted by MGB Oct 27, 2008 at 3:42 pm
1
MGB

Tesco are the greedy bullies of British retail. I hope they get their come-uppance some (unlikely) day.

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Bigger boys came...

posted by ChrisMc Oct 27, 2008 at 3:42 pm
2

Bullies.

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hope so

posted by Oct 27, 2008 at 3:43 pm
3

hope they get whats comin to them, greedy sods, sick of their adverts and bs,

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those crappy adverts

posted by were cheaper than you! Oct 27, 2008 at 3:58 pm
4
were cheaper than you!

(3) i agree those adverts are so annoying -

price comparison sites always mentioned, forget the fact it is a crappy experience buying anything from these cattle markets.

what about customer service in store demos etc.

suppliers should not give in, they will just devalue your product and use them to sell cans of beans.

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greedy B's

posted by sainted Oct 27, 2008 at 4:27 pm
5
sainted

wonder if i go to tescos tonight pick up a few games and tell them i will pay then in 60 days how they would like that

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Re: greedy B's

posted by Oct 27, 2008 at 4:42 pm
6

@5

Do it! Do it!

Take pictures. Lots of pictures.

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Re: Re: greedy B's

posted by K Oct 27, 2008 at 5:22 pm
7
K

If this isn't an abuse of a dominant market position, I don't know what is.

And at a time when most companies (and pretty much all of their suppliers will be smaller than Tesco) are heavily reliant on prompt payment of invoices so they can meet wage bills and similar, you've got Tesco taking the pee and unilaterally extending their payment terms.

I say "unilaterally" - I imagine most supplier will still have to consent to a variation to their trading terms and conditions, but Tesco is so big, suppliers are in a no win situation. Say no to Tesco and they'll pull the plug on any future orders under your contract and send your business under completely. Nice.

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Re: Re: Re: greedy B's

posted by AnotherWorld Oct 27, 2008 at 5:35 pm
8

Greedy is an understatement.

Whilst EUK are having their credit insurance pulled and are paying upfront for stock, Tesco's come along and throw their weight around.

Will definatly frighten publishers/suppliers and a lot of them will re-think about trying to cut out EUK as a route to market. If they start dealing direct with supermarkets this is exactly what will happen.

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Re: Re: Re: Re: greedy B's

posted by oiyeah Oct 27, 2008 at 5:44 pm
9

As if publishers don't have enough to deal with at the moment, increasing dev costs, reduced credit facilities, cost-cutting (usually the painful staff cutting option) and global finacial turmoil, the retail market dominator asks for something it doesn't need.

I've said this before for different reasons, but if the publishers of the must have games gave a universal response to these kind of hostile demands, the buying public won't not buy the games, they will simply buy elsewhere.

And the word partnership is still being used.

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Re: Re: Re: Re: Re: greedy B's

posted by Burner Oct 27, 2008 at 6:24 pm
10
Burner

If they had said 60 to 90 days then yeah that's excessive, but 60 days is fairly standard. Any company I have worked with that supplied Tesco knew them to be firm but fair, they paid on-time and were always willing to work with us. Tesco are not fools, no matter what people say about them being too big for their boots, any supplier this effects will have been notified, in advance, and negotiations would have taken place.

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Daily Mail Campaign

posted by Bob Oct 27, 2008 at 7:01 pm
11
Bob

At a time when the Daily Mail are running a campaign to get Goverment/Councils to settle their bills in 10 days to help small business this is even more outrageous.

I really hope some of the suppliers stand up to Tesco, as if they get away with it all the other supermarkets will follow suit.

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Re: Daily Mail Campaign

posted by keatsmeister Oct 27, 2008 at 8:47 pm
12
keatsmeister

Well, as a piece of accounting, that is a work of art. However, this will continue as long as publishers refuse to make a stand.

How many publishers come and go in times of relatively healthy economic conditions, much less in a credit crunch when Ebeneezer Tesco decides he isn't going to pay his bills on time?

This is a blatant abuse of position. Supermarkets have ridden roughshod over suppliers for years, resulting in many farmers losing their livelihoods. Have they now chosen to gun for games publishers too? This is nothing short of opportunistic blackmail

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Re: Re: Daily Mail Campaign

posted by Bob Oct 27, 2008 at 9:53 pm
13
Bob

Yeah but we all know what's going to follow this don't we??!!!

They'll look to give their items 60 days to sell-thru and want to return the lines that haven't. 60 days is about the shelf life of games these days.

I'm sure they already enjoy some kind of Sale or Return arrangement but wouldn't be against them looking to tighten this next.... then finally they'll squeeze the margins!

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Good luck

posted by PlorkStation Oct 28, 2008 at 9:35 am
14
PlorkStation

In the US EA and ATVI have Wal*Mart and GameStop on 30 day terms. Good luck with them Tesco.

Can't see SONY, Nintendo or MS being to quick to roll over either.

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Re: Good luck

posted by Oct 28, 2008 at 10:16 am
15

It's a tough one for us smaller publishers, I wouldn't say we'd sell our souls to gain tescos support but I think we could handle 60 days if meant being on their shelves in the run up to Christmas and over the new year.

Waiting an extra 30 days to get paid for the opportunity to generate incremental revenue is a straight forward decision in my eyes.

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Re: hey waken up consumers

posted by steve Oct 28, 2008 at 1:19 pm
16
steve

this can only mean more rock bottom prices for us all well done tesco ty

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60 days

posted by Oct 28, 2008 at 2:25 pm
17

As long as we can have 60 days to pay for marketing and process markdowns and returns for them, I could live with that.

*wakes up from dream*

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Re: 60 days

posted by Simon Oct 28, 2008 at 9:00 pm
18
Simon

this is the ideal opportunity for the publishers to put their faith back into INDIES - Where it all started !!!!!!.

I am sure that all the indies out there will soak up TESCO's Stock

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Re: Re: 60 days

posted by Mr G Oct 29, 2008 at 9:30 am
19
Mr G

put your faith back in the indie sector we can promote your products better than any other store especially supermarkets!

we have instore demo's running and can give good honest advice on your products.

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Re: Re: Re: 60 days

posted by Oct 29, 2008 at 10:27 am
20

When you say "instore demos running", do you mean "selling the free promo on ebay" to somebody desperate for the game two days early to make a fast buck?

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"Free Promo"

posted by Bob Oct 29, 2008 at 6:03 pm
21
Bob

@20

Never get the chance to sell a promo on Ebay. Gem/Centresoft staff keep them for themselves!

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Is this another way of saying:

posted by koti Oct 30, 2008 at 12:22 pm
22

We're in the **** too and we need a little bit longer to pay?

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