Retail's Best Kept Secret
Today's post is an excerpt from our latest whitepaper focusing on the very uncertain and very volatile world of Retail.
For the foreseeable future, revenues are not going to increase easily for UK Retailers. Deteriorating consumer confidence, in tandem with rising supply chain costs, has forced UK retailers to scrutinise every penny spent.
Research has shown that 66% of costs incurred by UK businesses are procured on some level. However, as retailers look to maintain profits and retain margins, this statistic is often ignored and the more common cost-cutting initiatives are pursued (such as reducing head count, closing stores, cutting budgets)
These quick-win initiatives achieve what they set out to and between 2008 - 2010 aided the release of cash. However, this short term view means that few retailers have actually looked to fundamentally change buying behaviour. As such, with all the low hanging fruit (in terms of cost cutting initiatives) now picked, there's little left that is relatively simple to achieve - leaving many retailers asking themselves "What now?!".
Our latest research found that many retailers' Senior Management teams gave GNFR (indirect Procurement) little attention in comparison to other priorities, resulting in a general lack of awareness as to the importance and true value that better managed GNFR expenditure can deliver.
Thus a major opportunity lays relatively unknown and under-exploited for many UK retailers - that is, sustainable profit improvement through better management of GNFR costs.