The Forum of Private Business has accused Matalan of having “an ongoing policy of blatant and sustained abuse” against its suppliers.
The charge follows the retailer’s imposition of a 2% deduction on all payments to suppliers from 1 September 2008.
Matalan intends to use the money it saves to pay for television advertising and other marketing and PR activities.
The FPB has entered Matalan into its online “hall of shame” – fpb.org/hallofshame –
a list of retailers that are “making the smaller business owner’s life hell”.
Matalan is also planning to use the extra supplier money to expand in retail parks and online, develop international franchises and refurbish stores.
Buying director John Lyttle has told FPB members that Matalan would impose the charge to fund “drive efficiencies” and prepare for “future growth”.
“The benefit from the above expansion will generate increased business, and I hope that you will participate in this growth,” he told suppliers.
But FPB chief executive Phil Orford says FPB suppliers to Matalan will disagree.
“This is not the first time that Matalan has passed on costs to its suppliers and it represents a payment problem that is endemic across a number of industry sectors,” he commented. “The fact that this latest charge is being justified to fund initiatives like marketing and international expansion adds insult to injury for many smaller firms, which are struggling to control essential costs as the economic downturn continues.”
He said that Matalan clearly had “an ongoing policy of blatant and sustained abuse, using its size and power to make more money at the expense of its supplier base”.
In June, Matalan posted a pre-tax profit of £53.2m, almost double the figure for 2007.