It is no secret that cutting costs can be an effective way to protect profit margins when sales growth is hard to come by. Retailers squeeze suppliers, with a goal of being as aggressive as possible. But is there another way? One which could yield more substantial reductions in spend?
This is a topic that has been high on the agenda for many of our clients, and the benefits are clear. One major European retailer that we have been working with on a three year program is on target to reduce spend on goods for resale by at least 8% in that period. We helped them build open relationships with suppliers where sharing data was the norm, a step that enabled collaborative working to reduce cost across the whole supply chain – benefiting both parties. In reducing the number of supplier contracts available, the retailer also benefited from lower supplier prices in exchange for exclusivity.
