Overview of the Retail Industry
The retail industry chains include companies selling goods and commodities for household consumption. The industry at large is fragmented and relies on factors such as rising consumer spending, increasing disposable income, and relative growth in the GDP to gain sustainable growth in the market. Today, owing to the recent shift to a more customer-driven economy, consumers across the globe are craving for creativity, convenience, and authenticity in the products being offered to them. Additionally, the growing incidence of improved lifestyles around the world is encouraging the growth of the retail industry amid fluctuating consumer preferences and rising consumer spending habits. Although the retail market is witnessing a considerable growth owing to the increasing growth of middle-class population, this sector is expected to face challenges due to certain factors including:
- Higher disposable income: With the steady recovery of the global economy, customer spending power is likely to increase in the coming years as the disposable income of the customers was subject to fluctuation due to the great economic recession.
- Supply chain: To encounter the rising demands of the target audience, retail industry firms are coming up with feasible ways to curtail the operational cost without comprising on the quality of the products offered. Moreover, companies need to ensure that right product is delivered to the consumers at the right time as they are more informed than ever before and expect impeccable service quickly.
These factors are compelling firms across the retail industry to leverage the use of category management solutions. Category management solutions help firms optimizing cost structures, efficiency, and effectiveness of the business. These solutions also help companies build category relationships with customers and boost the overall performance.
The Business Challenge and Journey
The client, a leading multi-brand retailer with business units spread across the globe, wanted to identify the need to increase the contribution of procurement delivered to the business and gain insights into ways of making necessary changes while operating in a fast-paced and highly competitive environment. This was to ensure and maintain operational delivery and steady supply. The client also wanted to develop marketing tools and a long-term category vision to expand their business further.
To help the client transform their procurement, improve savings, quality, and efficiency of their services, SpendEdge’s category management specialists tailored a comprehensive research methodology. The comprehensive methodology included primary research coupled with qualitative and quantitative data collection procedures. The specialists also gathered information from a wide array of secondary sources such as paid, company presentations, industry forums, and industry database within in the retail industry space.
With the help of this category management solution, the retail industry client identified supplier relationship management, strategic sourcing, and procurement transformation as strategic opportunities for value creation within the procurement function. The client also acknowledged the right strategies and tools that could address business requirements tied to the categories. Also with the recommended standardized processes and training to support the adoption of new practices, the client increased capability and measured performance at functional, executive, and category levels.
Key questions answered in this category management engagement
During the course of this category management engagement, the client reduced source-to-pay cycle times and improved supplier selection decisions. The client also deployed a standard category management process to decrease commercial risk and robustly manage the categories with customers.