Global Specialty Retail Industry Overview
Over the past few years, rapidly growing middle class, availability of trained manpower at a competitive cost, market-oriented stable economy, and well-developed credit and financing facilities have boosted the specialty retail industry. The industry is driven by broad macroeconomic variables rather than product-specific trends. Despite this, many specialty retail stores are facing increasing competition from e-commerce and departments, limiting gains from increased consumer spending.
Business Challenges Faced
Highly competitive specialty retail markets are characterized by faster and less expensive market products. To produce the right products in the right volumes at the right time, one of our clients headquartered in North America required a proprietary procurement operating model. The procurement team of the client delivered 1500 projects to source goods/services of more than 50,000 merchandise products (GFR) to customers across the globe. Not only this, but they also managed events to source non-merchandise goods/services (GNFR). However, as the diversity of their spend grew, the client required an agile process to address the uniqueness of non-merchandise spend.
Managing non-merchandise spend in the specialty retail industry requires an effective procurement operating model. Request a free proposal to access our tailor-made procurement market intelligence solutions.
Our Research Approach
To cater to the specific requirements of the client, the procurement team at SpendEdge performed a specialty retail industry analysis. They recommended a procurement model that involved:
- GNFR using a Centre-led model
- GFR using a Centralized model
The number of suppliers in the GNFR was thrice the GFR supplier base. The center-led model required deep market knowledge of the specialty retail industry and the management of hundreds of sub-categories. With SpendEdge, the client gained greater transparency within the procurement process. Our market expertise created the opportunity for continual process improvement. Additionally, specific category alignment enabled the client to fine-tune projects to suit each spend category. The centralized model helped the client to analyze factors such as lead time, shipping time, rebate, product quality and move towards a “value” auction model. This helped the client to get the best possible terms during every purchase.
The comprehensive insights into the specialty retail industry helped the client to map over 90% of their spend and utilize real category management to track all upcoming exposures. Also, the proprietary procurement model created a streamlined process and resulted in new opportunities, enabling the client to increase spend under management by 35% in six months.
Gaining accurate market insights is crucial to streamline processes and increase spend under management. Request a free demo to access our web-based procurement platform and gain detailed insights.
Key Trends That Will Redefine Specialty Retail Industry in 2019
- Changing preferences of millennials will require companies to engage consumers outside traditional shopping parameters and become cultural figures.
- The number of times people who are willing to wait for free shipping has dropped significantly. Companies in the specialty retail industry will have to evaluate new ways to differentiate themselves.
- Consumers are seeking a more engaging experience. This will require specialty retail brands to add layers and new experiences to their traditional retail models.