Retail Procurement and Supply Chain Consulting
Success in retail demands mastering customer needs through an effective range, outpacing competitors, and delivering seamless customer experiences—all while tackling cost pressures. Strategic procurement & Supply Chain power this success by maximizing brand partnerships, building resilient teams to drive growth and agility and transforming private labels.
Driving Profitability: Essential Strategies for the Retail Sector
1. Optimize Indirect Spend
Indirect spend, such as Logistics, IT, and Marketing, is often managed by individual business functions without procurement involvement, which can lead to outsized needs and inflated costs. Engaging procurement in these areas ensures cost efficiency while aligning key activities, like shopfitting, with brand identity.
2. Maximize Private Label Potential
Private labels drive margins and customer loyalty, but success requires a focus on cost efficiency and quality. Strengthening supplier relationships, leveraging advanced cost analysis, and implementing best-cost country sourcing are key to boosting profitability. Additionally, value engineering and spec optimization ensure products remain competitive while meeting quality standards.
3. Enhance Brand Negotiations
Effective brand negotiations are essential for securing stronger terms, maximizing value, and building lasting partnerships. By conducting detailed category analysis, evaluating supplier performance, and aligning negotiations with long-term business strategies, retailers can unlock significant benefits.
INVERTO Value Finder
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Our pre-designed templates deliver insights in just days, empowering you to analyze data by category, supplier, product, or key KPIs. With over a decade of expertise and 80+ successful projects, we’ve honed best practices that solve typical retail pain points and uncover hidden opportunities.
Retail Under Pressure: The Challenges Ahead
1. Threat of New Market Entrants Disrupting Competition
Agile players are reshaping the retail landscape with rapid production cycles, competitive pricing, and data-driven strategies. Their success intensifies pressure on traditional retailers to differentiate, accelerate time-to-market, and enhance customer experiences. Swift adaptation and investments in digital transformation are critical to maintaining competitiveness.
2. Rising Costs Putting Pressure on Retail Margins
Rising prices for raw materials, labor, and energy are placing significant strain on retail margins. Retailers must balance maintaining affordable pricing for consumers with ensuring profitability. Strategic levers such as value engineering, cost breakdown analysis, and strong supplier negotiations can unlock savings while maintaining quality and competitiveness.
3. Evolving Consumer Preferences Driving Complexity
Shifting consumer preferences, coupled with heightened expectations for sustainability, personalization, and speed, are adding complexity for retailers. Consumers demand tailored products, rapid trend responses, and faster delivery options like “next-day” shipping. Retailers must adapt quickly in assortment planning, sourcing, and fulfillment while optimizing delivery channels to stay competitive.
How we help retailers thrive
Indirect spend, including categories like IT, Marketing and shop design, is often managed without centralized procurement control, leading to outsized needs and consequently inflated costs and inefficiencies. We address this by centralizing purchasing processes and giving procurement the mandate to manage demand effectively. For example, in shopfitting, a critical touchpoint for customers, we ensure specifications support brand identity while delivering cost savings.
By enhancing transparency and negotiating more favorable contracts, we help brands reduce unnecessary expenses while maintaining consistency and quality across all indirect procurement areas.
Case Study: Achieving 10% Cost Reduction Through Indirect Spend Optimization
For a leading European department store chain, we centralized procurement processes across 35 initiatives in indirect categories. Our work delivered a 10% reduction in indirect spend, translating into €20 million in savings.
Here’s how we achieved it:
- Transparency: We implemented a clear spend tracking system, focusing on expenses exceeding €50k to ensure tighter cost control.
- Demand Management: Collaborated with key stakeholders to align spending with strategic objectives, avoiding unnecessary or duplicative purchases.
- Optimization: Tailored shopfitting specifications and service levels to support the brand’s premium identity while identifying cost-saving opportunities in materials and processes.
This hands-on, collaborative approach not only reduced costs but also preserved the quality and customer experience.
Private labels are essential for boosting margins and fostering customer loyalty, but managing them effectively demands a delicate balance between cost efficiency and quality. We tackle this challenge by standardizing product specifications, strengthening supplier relationships, and optimizing sourcing processes. Leveraging tools like online auctions ensures we secure the best value while maintaining the highest standards.
To further enhance cost-effectiveness and supply chain resilience, we leverage our office in Shanghai to support Far East sourcing where appropriate. This local presence enables us to work closely with suppliers, ensuring compliance with quality requirements and delivering competitive pricing.
This structured approach ensures private-label products consistently meet customer expectations, drive profitability, and position brands for long-term success in a competitive marketplace.
Case Study: Boosting Margins by 7.6 percentage points Through Private Label Optimization
For a leading European food retailer, we implemented a structured approach to maximize Private Label potential by balancing cost efficiency with quality standards. This included streamlining supplier negotiations, conducting cost breakdowns, and standardizing product specifications.
Key initiatives included qualifying new suppliers, leveraging data-driven tendering processes, and conducting workshops to optimize top SKUs. These efforts led to a 7.6 percentage point improvement in margins, strengthened supplier partnerships, and ensured high product quality.
This comprehensive strategy positioned the client’s Private Label products for long-term profitability and competitiveness in a dynamic market.
Strong brand negotiations are essential for securing better terms and strengthening supplier partnerships, but achieving success requires thorough preparation and strategic execution. We equip procurement teams with a proven toolkit that includes analysis of the category and individual suppliers, clear margin optimization techniques, and tailored negotiation strategies.
By providing targeted training and on-the-job support, we ensure teams are confident and well-prepared to achieve the best possible outcomes. This approach not only improves immediate results but also builds internal capabilities for lasting value creation.
Case Study: Driving 2.3 percentage points Margin Growth Through Strategic Negotiations
For a major retail department store group in Europe, we transformed their brand negotiation processes to improve transparency, efficiency, and outcomes. By introducing a client-specific toolkit, including a contribution margin calculation tool, supplier benchmarking, and negotiation guidelines, we enabled the client to negotiate effectively with their top supply partners.
This structured approach resulted in a 2.3 percentage point improvement in contribution margins, equivalent to €3.6 million annually. Alongside immediate results, we equipped the procurement team with enhanced analytical tools and a strategic framework for sustained success in future negotiations.
PROCUREMENT: LET’S GET REAL!
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Success Stories in Retail Management
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