With buying and selling at the core of retailers’ raison d’être, effective procurement is integral to success…
Retail is a sector that lends itself to scale. It is a fiercely competitive business that in recent years has had to deal with an economic downturn, the arrival of discount retailers such as Aldi and Lidl in the UK, and the rise of e-commerce. This has forced retail businesses to seek value throughout the company, including in procurement. It’s therefore no surprise that 43 per cent of retail respondents say their procurement model is very effective, the highest proportion across sectors by some distance.
It is also the sector where most respondents derive very high value from their procurement function (27 per cent). “In many sectors the bottom line is so far removed from the top line it is hard to clearly link value to profits. With retail, specifically goods for resale, there is a direct and immediate link from the bottom line (the purchase price) to the top line (the retail price). This really helps drive better performance.” says Chris Borrow, senior manager at Ayming. Retailers buy and sell a huge amount of goods every year, so an effective procurement strategy is central to companies’ success.
“Procurement as a function has grown in status and stature as the years have passed,” says Graham Copeland, director of procurement at the Co-op retail chain in the UK. “The quality of our buying has led to better customer experiences. In food, for example, we’ve done a great job on quality.”
In turn, this has translated into tangible benefits for the business. “It’s had a massive impact on our likefor-like sales and we have been outperforming the competition every month for over a year,” he adds.
“Retailers are ambitious and open to exploring creative procurement solutions,”concurs Niccolò Mazzoni, principal at Ayming Italy. “The findings of the survey are very consistent with our experience working with retailers across many European markets.”