MARKS & SPENCER has asked its suppliers for discounts of up to 5.5 per cent in a move that could save an estimated £40 million in buying costs and help to fund the latest advertising campaign, The Times has learnt.

The retailer has informed all its suppliers in home furnishings, clothing and food that it requires a 0.5 per cent discount on the cost price from next month to help to pay for the latest marketing campaign as well as improvements to its stores and its internet site.

Meanwhile, “direct” suppliers that provide goods straight from factories mainly in the Far East — about a quarter of all M&S’s suppliers — have been asked for a 5.5 per cent discount.

Suppliers have been called to a meeting on March 16 in which M&S will explain the details of its proposals, but the City is not expected to be updated on the level of savings until the retailer issues its full-year results on May 23.

M&S’s suppliers gave a 3.75 per cent discount in September 2004 and another 2.5 per cent from last April in order to deliver £140 million in savings as part of the plans of Stuart Rose, chief executive, for a turnaround of the business.

A spokeswoman for M&S said: “We have reviewed our terms with all of our suppliers. We are continuing to invest heavily in marketing and on our store remodels and online programme.

“As a result volumes are increasing and we are getting quicker turnaround on product, which is benefiting suppliers with better cashflow and higher revenues through their business with M&S.” Suppliers confirmed that M&S’s trading had held up since the new year.

Nielsen Media Research, said M&S spent £23.9 million on advertising between September and December last year, 23 per cent more than a year earlier.

Last year’s advertising campaign featuring the celebrity models Twiggy and Erin O’Connor was credited with helping M&S’s sales to recover in a tough retail climate.

The same models are appearing this year in a renewed push. One M&S supplier told Drapers, the fashion trade journal: “It’s another discount to add to the difficulties that we’re facing as suppliers but these things have to be costed in.”

Analysts said the big discount could help to offset the impact of a stronger dollar, which is used to buy goods in Asia.

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