The private equity profiteers behind Maplin Electronics have turned the screws on suppliers to hand over bigger rebates to help pay for physical and digital store improvements or risk having their kit sidelined.
The geek fiddlers emporium was sold to Rutland Partners for £85m almost two years ago when the investor promised “change, restructuring and investment” following a period of shrinking profit.
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Rutland will be determined to make a better fist of managing the firm than the previous equity backer Montagu, which forked out £244m for Maplin in 2004 and sold it at a considerable loss to the latest owner.
With money in mind, suppliers are being tapped to contribute to building a brighter future together or what buying director Ben Winter chillingly described as a “true win-win” situation.
“We are planning on investing over £10m in capital expenditure to improve our digital proposition over the next three years,” he wrote, in a letter - seen by us - that was sent to manufacturers and distributors.
“As we work to drive our sales, we are focused on working with our key partners who are keen to invest alongside Maplin in our growth plan,” he said.
Ominously, the retailer said it was “undertaking reviews” of 50 category ranges and was “planning on investing close to £5m in improving retail pricing for customers every year”.
Other than a “fantastic new website”, Maplin was also testing “new format stores and merchandising concepts”, and developing better technical skills and support services.
Winter said the “path we are about to embark on” comes after two years of growth since the new owners came on board, including most recently a 2.3 per cent bounce from Black Friday to 2 January, with a 33.3 per cent bounce in online trading.
“As a strategic partner to Maplin we want to deliver our vision together and as such we are looking to grow our business and yours over the coming years.”
Maplin demanded a certain amount of money from each supplier based on sales from the prior year, sources close to the matter told us
“We have listened to your requests for a shared and joint plan for growth and we now require from you an annualised investment of X to achieve this growth, which is over and above current terms.
“As we continue to invest for our customers, it is vital we work with the right strategic partners".
The projects discussed will be rolled out over the next 18 months, which will take Rutland Partners even closer to a five year ownership of Maplin - when it will may to realise its asset, results permitting.
Sales for the 52-weeks ended 21 March 2015 grew 4.1 per cent to £236m. Income from shares in a group undertaking helped flatter net profit, which grew to £12m from £9.9m in the previous 64 week financial year. ®