Australian
05-Oct-2011
Page: 37
Business News
By: Blair Speedy
Market: Australia
Circulation: 128985
Type: Australian National
Size: 363.45 sq.cms
Frequency: MTWTF
Kmart boss negotiates for permanent price cuts
BLAIR SPEEDY
RETAIL
KMART boss Guy Russo says he
has not followed the lead of
more volume, and to do that we
wanted to drop our prices," he said.
Wesfarmers stablem ate Target in
demanding a 5 per cent discount
on all deliveries from suppliers for
the next three months.
Target boss Launa Inman stun-
"I'm not interested in doing a
three-month special deal with
ned suppliers last month by de-
Kmart dumped Pacific Brands
as a supplier in the past financial
manding a 5 per cent discount on
all merchandise delivered between September 26 and December 23, which some said they could
not afford without cutting staff.
Mr Russo said yesterday
Kmart had cut its shelf prices by
an average of 30 per cent in the
past 18 months, but had negotiated lower costs with suppliers
individually.
"We ask our branded suppliers
to cut their prices
I didn't send
an email out to them, we dealt
with them one by one," he said.
Unlike Target, which blamed
poor trading conditions for its decision to impose the "rebate" on its
suppliers, Mr Russo said he had
won suppliers co-operation by
promising them higher sales.
"The rationale we gave them
was that we wanted to sell 10 times
suppliers. The only deal I want is
one that allows us to offer the
lowest prices all the time."
year when the companies were
unable to agree on price reductions that would have brought
their products closer to Kmart's
private label merchandise. In her
letter to suppliers, Ms Inman
sought to justify the rebate on the
grounds that the rise in the Australian dollar in the past year and
falls in commodity prices meant
suppliers could afford to discount.
But Mr Russo said he did not
believe it was possible to apply
such rules to all suppliers.
"Every negotiation with every
supplier is done at a different time
and under different conditions,
and it may have been hedged or
not hedged," he said.
"The problem with asking for a
reduction in price because the dol-
dollar drops, do the suppliers send
a note to all the retailers saying
they're going to increase all their
prices?"
Mr Russo said he was not interested in taking over the top job at
Target, which is seeking a new
managing director after Ms Inman's resignation last month.
"I'm very happy here at Kmart,''
he said.
Kmart yesterday released the
results of a survey of 1025 mothers,
showing 18 per cent were planning
to cut their Christmas spending
this year, and 66 per cent were
concerned about the cost of
Christmas gifts.
"You don't need to do a survey
to work out that people are nervous, but household costs have
been going up for the past three
years. Even if interest rates have
stayed on hold, consumers have
less in their wallets than they did
after the global financial crisis."
Mr Russo said he was not ove-
rly disappointed by the Reserve
Bank's decision to hold interest
rates steady yesterday.
lar has gone up is that when the
JANE DEMPSTER
Guy Russo yesterday helps a Kmart store in Sydney prepare for the Christmas shopping period
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