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Suppliers shocked after Woolies cash demand

The move has caused an angry reaction from many of its suppliers, which are concerned about the demand for investment as well as a change in trading terms, meaning Woolworths will be taking longer to pay some of its partners.

While the games industry has yet to comment officially on the controversy, the move has prompted the British Toy and Hobby Association to hit back, as reported by MCV sister mag Toy News: “It appears that, without prior consultation, suppliers are to be taxed at around five per cent of their turnover to finance investment by Woolworths.”

“In addition to the financial contribution to be deducted from a supplier’s account, new payment terms and an increased settlement discount have been introduced with effect from February 1st 2007, again without any prior consultation.”

“Given the summary nature of the demands made, the Association understands that members affected are giving a robust response in return and requesting the courtesy of a negotiated agreement.”

The Financial Mail also reported yesterday that the High Street chain is planning to close as many as 60 of its 825 stores in the next three years, but it has also been reported elsewhere that this could rise to as many as 200.

“We have always worked closely with you as a supplier to help deliver the best possible proposition to our customers,” the letter, penned by managing director for commerce and marketing Tony Page, is reported to say. “To that end we are seeking support from every supplier for the significant investment we have made in our financial year to February 3rd 2007.”

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