Financial Mail’s Lisa Buckingham said the 19th November letter from Halfords to suppliers – leaked first to BikeBiz.com – demonstrated "shameful tactics" of "retail bully Halfords."
Halfords’ director of trading Paul McClenaghan – who joined the company from Dixons in July – had penned a very stiff letter, one that incensed suppliers to Halfords.
The Mail on Sunday calls the letter "brutal" and "punishing".
Buckingham wrote: "Though McClenaghan rambles on about how his proposals, which cover six pages, will help ‘both of us’, the tone of the letter makes it quite clear that any supplier that has the temerity to demur will be summarily axed…
"[The] dictatorial style and unilateralism of Halfords are appalling, particularly from a company that brags about its social responsibility….Shoppers clearly benefit from lower prices. But this is a shameful way to go about providing them."
A Halfords spokesperson told the MoS: "The growth of the business is being funded by sales and suppliers will grow with the company."
Forbes.com has also reported on the story, saying Halfords risks being reported to the Office of Fair Trading. A Halfords spokesperson said there were no grounds for an OFT probe.
‘We have very good relations with our suppliers, and we have not had any issues with them. The OFT has not contacted us, and we don’t see why they would."
One Halfords supplier told the Forum of Private Business: "Unlike in the food sector where there is a code of practice policing the relationship between suppliers and supermarkets, in our sector suppliers are unprotected and vulnerable. Halfords is abusing its total market dominance, as the only retail giant in the sector, and is wringing the money out its suppliers. It is all about greed. There is no loyalty, especially since Halfords left the Boots group. These new payment terms will endanger businesses and will cause job losses. The Government must help small businesses and stop these new payment terms being imposed on us without any negotiation. Furthermore there needs to be a code of practice in our sector protecting us from this appalling abuse of dominance."
FPB’s chief executive Nick Goulding said:
"Halfords must not and cannot be allowed to abuse its market dominance, without fear of challenge or punishment. The Government must intervene in this matter to ensure the interests of Halfords’ suppliers are not ridden rough shod over. We have written to Halfords’ Chief Executive telling him that these unilateral changes to payment terms – imposed mid-contract without negotiation – are contrary to UK and European late payment legislation.
"This is supremely arrogant behaviour from an organisation that owes much of its success to the standard and quality of goods produced by its suppliers. It is a kick in the teeth to those suppliers to see Halfords crow about its multi million pound profits yet still want to squeeze money out of small firms balancing tight profit margins. These businesses are singularly unimpressed by the bully boy methods of the new management team."
Goulding said he had asked Halfords to follow the example of Boots, its former owner, and sign up to the Better Payment Practice Code – committing itself to prompt payment.