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Last Updated: Friday, 3 March 2006, 11:45 GMT
M&S asks suppliers for price cuts
M&S ad featuring Twiggy
Celebrity model Twiggy appears in M&S's latest ad campaign
Marks & Spencer has written to all of its suppliers asking for cuts of up to 10% on the price it pays for goods.

Part of the savings, which could be as much as 40m, will be used to fund its advertising campaigns, the group said.

The cuts will come into force from 1 April and M&S said it took the step after reviewing its terms of business.

A spokeswoman said suppliers had been asked to cut their prices as they were now reaping the benefit from rising sales and supply chain improvements.

"The main reason is suppliers are benefiting from our control of the supply chain, they're not holding stock for as long as they did two to three years ago," she said.

"Additionally they are benefiting from increased revenues and better cash flows."

Promotional drive

The reductions will help pay for continuing M&S store improvements, advertising and its online programme.

All suppliers - across the clothing, food and homewares sectors - will be giving the group a 0.5% discount, or "marketing allowance" on its cost price from next month.

The spokeswoman added that the group already had a 10% discount in place with its full service suppliers - effectively wholesalers who buy their goods from other companies.

M&S has now asked its direct suppliers - mainly factories providing the group with clothing - to increase their 5% discounts, bringing them in to line with its full service suppliers.

The company declined to comment on suggestions that the move is also a means for M&S to offset high energy costs, and have suppliers take on part of the burden of transport costs, as fuel prices surge.

Around 90% of the retailer's suppliers are based overseas, mostly in the Far East, Asia and Europe.

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