Adidas is trying to implement new payment terms on its retail customers in Germany – and the local buying groups are not pleased. Both Intersport and Sport 2000 have been negotiating with their top supplier who aims to reduce the traditional cashback discount granted to early payers to only 1 percent.
Sport 2000 apparently managed to negotiate for its retailers a “fidelity bonus” worth 2.5 percent, which would allow the members to work with Adidas on a financially neutral basis as far as discounts are concerned, at least through 2016.
The tricky thing about that new way of rewarding retailers is that the discount would not only depend on the purchasing volume, but would be split by product categories (apparel, shoes, equipment). That would most probably be to the disadvantage of the shops that mainly buy shoes, for example, and fewer garments or hardgoods. On top of that, cashback for quick payers does have a long tradition in German retail, and shops with the necessary financial liquidity base their business model quite a lot on that incentive.
At the OutDoor show last week, both buying groups confirmed that they had gone quickly into new negotiations with Adidas to make an end to such plans. Jochen Schnell, the new member of the executive board in charge of purchasing at Intersport, declared that his group has reached an agreement with the supplier on behalf of the affiliated retailers. Intersport believes that the new deal is, as of now, money-neutral to the members. He said, on the other hand, the new agreement runs only through 2017. It needs to be sorted out what will happen later on.
Andreas Rudolf, Sport 2000 Germany's managing director, said that the new discount for good customers was worth 2.5 percent. Rudolf made his point clear by stating that the affiliated retailers should work on being less dependent on very big vendors to avoid such unilateral changes of the rules of the game. While the group managed to come to terms with Adidas at this point, Rudolf said that the supplier does not intend to change its attitude to substantially reduce the cashback bonus.
