Tesco has asked the architects of its stores and property developments to reduce their fees by as much as 20%.
The news follows Building’s revelation that the supermarket giant asked its QSs and contractors to accept pay cuts of between 20% and 50% as a result of the downturn in the retail sector.
One architect working for Tesco said the cuts had not been as draconian as those imposed on cost consultants, but that there was pressure to work for far less money. He said: “Tesco is applying the same logic down the supply chain, and is more aggressive than most. We are under a lot of pressure.”
Tesco is a large client to the construction industry, with annual procurement worth around £1.4bn. Amongst the architects employed by Tesco are 3D Reid, Allies & Morrison, Lyons + Sleeman + Hoare, RGP Architects and Sheppard Robson.
Sources claim there have been internal struggles at Tesco over the squeeze on the supply chain. One source said: “The property division is furious over what it sees as orders from high up in the business saying, ‘we’ve got to squeeze all our suppliers.’ Property doesn’t work like that. You can’t get people to provide the same services for 50% of the fee.”
Pre-tax profits at Tesco are likely to be more than £3bn when the supermarket reports in April.
Building’s story prompted enraged comments at www.building.co.uk/whatyouthink