UK superstore Tesco is trying to make a sudden change to the way it reimburses game companies during the crucial Christmas shopping season.
Typically, Tesco pays entertainment suppliers back within a thirty-day period commencing from the time product hits shelves, yet the supermarket now has plans to temporarily extend that credit period to 60 days.This policy, set to commence on Dec 1, means that Tesco will have fewer channels for outgoings during a time when it intends to invest heavily to be ready for Christmas shopping.
Tesco is the UK’s biggest superstore, with 15 million individual customers walking into its 2000 national stores every week. The company has more than 30% of the available market, and such a position makes it an important retail outlet for publishers.
Some commentators see Tesco’s new proposals as a cynical move to free up capital to prepare for Christmas at a time when borrowing money is not as simple as it used to be. Tesco’s new plan paints the retailer in an unflattering light: it is essentially materialising a credit card out of retail partnerships, taking publisher assets for the Christmas period but not paying back until its most profitable weeks of the year are over. The concern here is that publishers will have to wait longer for a return on their commodities, which could easily affect their financial strategies.
Tesco assures that this new policy comes with the best of intentions; that ultimately the firm needs to provide goods that its customers can afford.
Edge had contacted Tesco with a series of questions regarding its new policy, but the retail outlet declined to provide answers to them, instead supplying a general comment which claims that “all we are doing is working hard for our customers who are facing tough economic times and who expect us to negotiate the best deals on their behalf. We have written to suppliers to seek their agreement on the change and how to implement it before the end of the year.”
Eh? Surely they pocket billions in profit because they provide a better/cheaper service than anyone else and thus win more custom? They wouldn't be profitable if they didn't give customers what they wanted.
That said, this sort of strong-arming of suppliers has rightly gotten them in trouble before in other sectors... seem to remember something about milk...
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A company that pockets billions in profit can never rightly claim to be acting on its customers' behalf...
Eh? Surely they pocket billions in profit because they provide a better/cheaper service than anyone else and thus win more custom? They wouldn't be profitable if they didn't give customers what they wanted.
That said, this sort of strong-arming of suppliers has rightly gotten them in trouble before in other sectors... seem to remember something about milk...