Business owners should watch squeeze on suppliers

Big business is making the most out of the rising dollar to tighten the screw on its suppliers.

David Jones has announced that it expected to see further gains on its gross margins next year if it can extract improved trading terms and bigger contributions for logistics and marketing and other costs from suppliers benefiting from the strong dollar.

“It’s a good time for us to be negotiating with these branded suppliers given the benefits they’re obviously getting out of the dollar,” chief executive Mark McInnes said yesterday.

Good news though for businesses who sell to the wealthy. Consumer sentiment is strong, with the macro environment looking pretty good and not affected by rising interest rates and petrol prices, he says.

Meanwhile David Jones has reported a 9.7% increase in first quarter sales and says it is in a strong position in the lead-up to Christmas. The retailer posted sales revenue of $471.9 million between 29 July and 27 October, up 9.7% year-on-year. On a like-for-like (same store) basis, sales growth was 6.7%.