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'Pay to Stay' deals

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'Pay to Stay' deals

Old 6th Dec 2014, 07:29
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'Pay to Stay' deals

Premier Foods shares fall as Vince Cable threatens action over letter - Telegraph

I'm amazed that such practices are still allowed in 2014, if it were some criminal gang doing this the police and government would be all over it like a rash. I'm having a light dose of schadenfreude seeing that the share price of Premier has gone down.


SHJ
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Old 6th Dec 2014, 07:52
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A fairly common practice by the big supermarket chains who charge suppliers for shelf space and deduct arbitrary sums from their invoices to fund "promotions". They know the suppliers will roll over and comply for fear of losing contracts. Extortion in all but name.
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Old 6th Dec 2014, 09:30
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if it were some criminal gang doing this the police and government would be all over it like a rash.
Cameron PLC doesn't like competition
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Old 6th Dec 2014, 11:24
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While he's at it, Vince Cable would do well to outlaw any payment terms in contracts longer than 30 days after receipt of goods or services, and introduce mandatory interest on late payments. I've worked for a couple of large aerospace manufacturers whose finance departments think its clever to wait for a solicitor's letter before paying bills.

The practice of late payment is a double-edged sword anyway, as the good value/good quality suppliers will seek their customers elsewhere, whilst the poor quality and overpriced suppliers clean up, leaving the customer's purchasing and quality departments to sort out the mess the finance department have forced upon them.
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Old 6th Dec 2014, 11:40
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Originally Posted by Lon More View Post
Cameron PLC doesn't like competition
I am sure you have spoken here about the evils of privatising monopolistic public services that are immune from competition.

Now you come out with a contradictory statement about a government which wants to open up these services to competition?

Maybe you should enlighten us?
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Old 6th Dec 2014, 11:49
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This is why ALDI are doing well, a chain such as Tesco or ASDA has to supply major brands such as Cadburys and Coca Cola, and the brands know this. This gives them massive power to set prices and squeeze the supermarket profit margins.

ALDI supply a much reduced number of items from lessor or unknown suppliers and are very much in the driving seat when it comes to pricing, as their customers don't expect name brands and will be happy any supplier as long as the quality and price are right.

Some supermarket own brands come out better in consumer magazine tests than the market leaders. For items such as cooking oil, milk and flour the average shopper couldn't tell the difference anyway.
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Old 6th Dec 2014, 11:50
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You want logic from a Socialist ?
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Old 6th Dec 2014, 12:28
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Mechta,

>I've worked for a couple of large aerospace manufacturers whose finance departments think its clever to wait for a solicitor's letter before paying bills.<

At one place at which I worked, a customer who was a large, well known electronics company was like that. They had several divisions, so with one of the divisions screaming for parts for a contract where they were likely to be in penalty for lateness, informing them that the whole company was on credit hold until the bill from the other division was paid made them figuratively have kittens. After they paid up with poor grace, they were informed that their whole company credit rating with us was so poor that all future orders would only be shipped once the pro-forma invoice had been paid. That worked, too - the cost of redesigning our parts out was such that it was still cheaper!

As our MD said, it was cheaper to lose them as a customer (which we didn't)than to continue financing their operation....
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Old 6th Dec 2014, 13:18
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ALDI supply a much reduced number of items from lessor or unknown suppliers and are very much in the driving seat when it comes to pricing, as their customers don't expect name brands and will be happy any supplier as long as the quality and price are right.

Some supermarket own brands come out better in consumer magazine tests than the market leaders. For items such as cooking oil, milk and flour the average shopper couldn't tell the difference anyway.
It doesn't always work. Lidl used to do a sandwich spread virtually indistinguishable from the Heinz one. Then they changed to another, presumably cheaper, one that was absolutely vile. Needless to say, once the regular customers had had a jar each, no one bought any more, and it soon disappeared from the shelves, never to be replaced. At least the big supermarkets can see that if the own brand sales are dropping against the premium brand, its time to run a check on their product's quality.
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Old 6th Dec 2014, 13:57
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Metro Man - I think you have the wrong end of the stick. Major manufacturers have to have their products stocked by the major supermarkets, and so the supermarkets can squeeze every penny out of them - space allowances, promotional allowances, listing allowances [and de-listing allowances - you have to pay them if they de-list your product!!] etc etc.
No point having a million dollar advertising campaign if no one can buy your product because you are not listed by the major chains.
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Old 6th Dec 2014, 15:09
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There are certain brands which are so important that they have to be stocked, Heinz beaked beans, Nescafe coffee and Coca Cola come to mind. If shoppers can't get icons such as these they will go elsewhere.

Their manufacturers are in a much stronger negotiating position than lesser known producers whose products can easily be replaced with another brand without the consumer objecting.

I rotate my weekly shop through four different supermarkets to take advantage of areas where they are best in. I'll visit a hypermarket to stock up on basics and a more specialised shop for my delicacies.
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Old 6th Dec 2014, 18:47
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They also give farmers a hard time which is why so many are turning to Farmers markets these days.
A neighbour of my cousin got to supply produce to a certain one that helps itself to every little bit it can.
A contract was signed to supply produce at a given price. Come Harvest the supermarket purchasing company turns around and says there's a glut of said produce and cuts the amount of money offered by three quaters. Because a contract has been signed you can't turn round and tell them to stuff it and sell the stuff else where so it's take it or leave it.
He and some other farmers have now started there own co operative and sell via farmers markets now, but he was nearly bankrupted by this tactic.
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Old 6th Dec 2014, 19:35
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Coffee is a good example. LIDL tend to stock Nescafe and three or four unbranded makes. The other supermarkets stock twelve to fifteen. This means that they need three times the floorspace. Probably 95% of buyers are happy with the selection LIDL provides. The big problem for people like Tesco is that they have set up for the large selection and now there is nothing they can do to change it.

It will be interesting to see what happens. My own view is that their profits will continue to collapse as they try to compete. So things like trying to get the suppliers to pay will continue.
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Old 6th Dec 2014, 20:01
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Can't help but think that this is just another indicator of the sad state of affairs of our way of life. Together with zero hours contracts it points to how low we have sunk.

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Old 7th Dec 2014, 07:22
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Radeng - sounds like a company I've dealt with. Three initials starting with G and ending with C with an E in the middle?
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Old 7th Dec 2014, 07:37
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A bit like a shipping company with a name similar to MASERK.A friend in the industry said they deliberately tried to bankrupt one of his customers.
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Old 7th Dec 2014, 10:23
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It's not only shops. Doesn't just about every non- NHS dentist charge a 'registration' fee?

CG
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Old 7th Dec 2014, 13:07
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Hearing of ALDI / LIDL reminds me of friends who work in various Food sectors and Branded companys.

Aldi and Lidl typically make a contract for 6-12 months at an agreed price. If commodities go down then you make more money / up you don't. BUT ALDI/LIDL don't come back demanding rebate when commodities increase and refusing price increase when the have gone up. Its why manufacturers offer best prices to them as no coming back demanding money.

Big 4 constantly demanding rebates so its so surprise their suppliers do it as well.

Its one thinhg to be asking for a rebate from a large supplier who doing the same thing with everybod else but asking a small supplier with tiny margins who waits 90 days to get paid then its unfair.

Tesco recent troubles were a result of some of this carryon.
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Old 7th Dec 2014, 14:10
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BBC News - Premier Foods backtracks on controversial 'pay-and-stay' plan
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Old 7th Dec 2014, 14:48
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UniFoxOs

How did you guess......Although there was another one with an I and 2 Ts who were just as bad.
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