Major retailers of the country have come together to boycott Reckitt Benckiser after the company shot off a mail telling them that it will slash their margins.
The first step was taken by the Future Group, which has stopped placing orders.
“We have stopped placing orders with Reckitt Benckiser effective February 11, 2011,” said a senior official at Future Group. “Further, we have written to Reckitt Benckiser to restore margin immediately and meet for further discussions.”
Other retailers too have followed suit: Aditya Birla Retail, Spencer’s and Bharti Wal-Mart have also stopped taking fresh orders for Reckitt brands.
“Retailers have been struggling and pushing for higher margins,” said Thomas Varghese, CEO, Aditya Birla Retail. “Every FMCG company is facing the same pressures and looking at squeezing costs in different ways. Reckitt has taken a retrograde step to cut margins unilaterally.”
Reckitt did not respond to Hindustan Times’ questions.
Reckitt, which owns brands such as Dettol and Harpic and recently acquired the Paras brands, had sent a mail to retailers informing that it will cut their margins by 1.5-2 percentage points, due to rising costs.
“Due to inflation and cost increase our margins share have been eroded and thus to protect our margins we have revised the price list with immediate affect,” the company email read.
{{/usCountry}}“Due to inflation and cost increase our margins share have been eroded and thus to protect our margins we have revised the price list with immediate affect,” the company email read.
{{/usCountry}}“The issue is more about the principle, to manage cost you cannot cut retailer’s margin. As of now Reckitt Benckiser’s inventory will last another week and we have already stopped future orders,” Mohit Kampani, VP merchandising, Spencer’s Retail.