Wednesday 16 June 2010

Pressure on UK Multiples to maintain the financial status quo?

Given the financial pressures, (CEO changes, zero UK growth, government limitations on scaling up, dropping share-prices, loss of autonomy) how likely are the multiples to take a hit on ‘banned conditions’?

GSCOP Banned Conditions (calculating financial impact)
  • No delay in Payments (they currently pay in 45 days approx., scope for negotiating extension, 90 days ring a bell?)
  • No requirement to predominantly fund a promotion (move from fully-funded to 50%?)
  • No obligation to contribute to marketing costs (suppliers’ current payments reduced to zero?)
  • No Payments for shrinkage (say average shrinkage = 2% of retail sales?)
  • No Payments for wastage (say 5% of sales, conservatively?)
  • No Payments as a condition of being a Supplier (say current payments for listing, etc = zero?)
  • Compensation for forecasting errors (think refund of additional margin from normal sale of promo-stocks)
  • No ‘arbitrary’ de-listing
Still need convincing?

See: The Retailer’s Perspective on GSCOP
A Way Forward?
See: NamCalc Workshop, 34 ways of calculating financial impacts on your business

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