Tag: retail management

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5 Must Know Cost Saving Strategies in Retail Business

A short visit to any retail setting will instantly undermine the huge cost required to set up such a retail business. Retail business require massive capital and operational expenditure including maintenance of large inventory, rent for retail space, and human resource costs. For all such substantial investments retailers usually gain a painfully low margin on products. However, many such retail businesses are still in existence for many decades. The most crucial aspect to sustain themselves in the retail business is cutting SE_Demo2down on the cost to improve the profit margin and make more money for the company. Although, cost savings for retail business can get very challenging, there are a few strategies which can save you money.

Virtual showrooms

Merchandising and showcasing the items to the customer takes up a lot of retail space. Rent being the most significant expense in the retail business, can be cut down by using virtual showrooms. One of the most notable examples of the effectiveness of virtual showrooms can be showcased by the fact that Amazon has replaced most of their physical shopping stores with virtual ones. Customers can quickly browse all angles of the product and even view product demos. Another technology that can assist in maintaining virtual showrooms is AR and VR, which can be used to demo products without having to stock them up.

Space sharing

Retailers are getting smart on how they effectively manage their retail space. It’s now a common practice in the retail business that retailers call in vendors to share their retail space in exchange for some fee. Retail space can be lent out to conduct some event, engagement program, position new brands, or create brand decorations. Such a setting not only helps ease the rent cost but also helps expand the business.

Outsourcing sales force

In a retail business, the sales force also accounts for a significant portion of the cost base. Getting too many sales personnel and staffs on the payroll can eat into your profit margin as the basic salary, commission, incentives, and benefits need to be paid. Outsourcing the sales force can be a good idea to shave off some of the cost from the company books. Outsourcing also gives retailers the flexibility to scale sales base as per requirement. This way company can easily increase sales bases in peak times such as holiday season.

Smart equipment purchases

Retailers spend a lot on inventories, and after that equipment. Sometimes it is the equipment that is unnecessary or becomes obsolete too soon. Today, thanks to advances in digital technology, owning digital tools can significantly cut down on equipment expenses. For instance, providing modified tablets to sales associates can help eliminate the need for multiple devices. Also, even when technology changes, the same tablet can function with small software updates. It is always advisable to replace equipment that performs a singular task with more versatile tools that are able to perform various functions.

Automation of inventory management

The increase in freight costs has resulted in a surge in distribution and inventory management costs. Legacy inventory management systems are highly ineffective and do not optimize material handling and logistics flow. Companies in the retail business are opting for cloud technologies that can automate communication and logistics management to cut their cost base. Additionally, automation also frees up time for employees to contribute to the retail business in more impactful ways.

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Top 5 Challenges in the Retail Supply Chain

The retail supply chain is the one of the busiest supply chains in any industry. They have to constantly innovate to serve the changing needs of customers, shift retail formats, and focus on both price and quality. It is very important that retailers closely monitor the supply chain to ensure that the products are free from defects and are always on the move to ensure a low cycle time. In a global economy, the retail supply chain is affected by country-specific politics, trade and tariff law, international relationships, and quality control. Also, the fact that the retail landscape is experiencing a massive shift in their working model due to the rapid emergence of e-commerce players such as Amazon. The value proposition provided by such e-commerce giant on all three fronts of price, quality, andSE_Demo2 service has disincentivized people to shop on the store. This phenomenon has complicated the retail supply chain, and retailers are continually looking for ways to optimize their supply chain.

Challenges in retail supply chain

#1 – Tight profit margin

The profit margin in the retail industry is one of the lowest across all sectors as retailers face constant pressure to deliver a razor-thin profit margin. Top executives working in the retail industry are prioritizing increasing profit margins for their operations. However, that remains a herculean task for retailers as the majority of the consumers are highly price sensitive. Additionally, the advent of online shopping has given the consumer a tool to compare prices across various retailers, which makes it impossible for retailers to sell for a higher price. The increasing cost of raw materials, overheads, and operations add to the misery of retailers who are already struggling with a meager profit margin.

#2 – Meeting customer expectations

The modern-day customer is very insistent on getting the best quality goods at the lowest price possible. Availability of goods through multiple channels, customer support, and choice variety has urged the customer to seek more options and variety while making a purchase. The retail supply chain struggles to keep up with varying customer demand as they have to stock more seasonal rages and assortments in order to keep their customer satisfied. Additionally, they have to provide such large variety of goods just-in-time to serve customers scattered across multiple markets and channels.

#3 – Operational inefficiency

Achieving operational efficiency in the retail industry is not an easy task. The retail supply chain lacks visibility across key business departments with silos of information existing across each business units. Companies have to opt for latest ERP systems as traditional spreadsheets just cannot keep pace with the operations function. Running the retail supply chain on static spreadsheets profoundly impacts the operational efficiency and may lead to multiple errors.

#4 – Quality & compliance

Quality in terms of product offering from retailers has changed in the last few years. The quality of a product today is a function of brand name, the point of origin, quality marks, customer feedback, and online reviews. Brands simply cannot claim their product to have certain qualities; they should meet certain criteria to be able to do so. Also, retailers need to comply with rules and policies set by governments and consumer bodies which mandate greater quality standards.

#5 – Omnichannel integration

The traditional brick and mortar store is not the only place where consumers can buy goods. Consumers have multiple channels to choose from, and on average they shop from at least three channels. Logistics and flow of goods from each of these channels will incur the different cost and have a varying delivery schedule. The problem in retail supply chain arises when retailers have to maintain consistency across product offering, quality, and customer experience. This has to be implemented from a strategic viewpoint as retailers have to streamline their inventory management and orders and transform business processes.

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Category Management Helps a Multi-Brand Retailer Transform Procurement, Improve Savings, Quality, And Efficiency

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.

request free proposalFurthermore, category management solutions offered by SpendEdge assist firm to streamline their supply operations and improve supply chain competence.

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

The Results

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.

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What’s in Store for the Future of Retail Supply Chain?

Professionals working or managing retail supply chain can tell you just how challenging it can become to optimize and bring efficiency to the supply chain. The complications that exist in the retail supply chain are far complicated than the supply chain in any other industry. But the advent of digital technology and other innovations have brought about landmark changes in the way retail supply chain operates. Majority of the big names in the retail industry are jumping on the bandwagon to embrace digital technologies that can assist theirSE_Demo2 supply chain. For instance, Google and Walmart have joined forces to offer thousands of Walmart items on its voice-controlled Google Assistant platform. So, what does the future hold for the retail supply chain?

The Future of Retail Supply Chain

Home Try-ons

One of the persistent problem troubling online retailers is the sheer number of returns and their expenditure on reverse logistics. The cost of reverse logistics becomes significantly high when it comes to fashion retailers who encounter high amount of returns due to fit, color, size, design issues. Recent reports have suggested that online fashion retailers in the US report a return rate between 20%-40% costing them millions of dollar. Retailers are looking at home try-one as a fix to this problem, where customers try the fashion item and return it instantly if any issues persist. For instance, Warby Parker offered its consumers options to try up to 5 frames online before making a purchase. This home try-on option enabled the company to offer its product at a price range of below $100.

Voice-based Orders and Other Innovations

Although voice-based order is in its nascent stage, the adoption rate looks to increase at an unprecedented rate. Currently, voice search on Google already accounts for 20% of the total search volume. Machine learning, natural-language question answering, and virtual personal assistants are set to take over the future in terms of customer demand fulfillment. Google Assistant and Amazon Alexa already have product lines that are highly responsive to voice commands. On the other hand, Amazon has made ordering easier with its new product named Amazon Dash, which automatically orders items that are out of stock with just a push of a button.

Solving the Last-mile Problem

The last-mile delivery problem has been troubling retailers for a long time now. The future, however, looks set to tackle such retail supply chain problems with multiple solutions. One solution that has received much appreciation from the retail industry is drones. Drones can solve the last-mile connectivity problem with ease and also allows the shipper to operate it remotely or even autonomously. Also, some retailers have looked upon uberization to solve such problems. Based on the principles of sharing economy, retailers are sharing the delivery vehicle in order to optimize the delivery and reduce cost base for the company. Additionally, retailers have also implemented crowdsourcing programs by rewarding customers to deliver the parcel on the way to other customers.

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Supply Chain Risk Assessment Helps a Specialty Retail Client Curtail Additional Supply Chain Costs

Category Overview

Over the next few years, the specialty retail industry is expected to witness unprecedented growth owing to macroeconomic aspects such as higher disposable income, consumer spending, and an increase in the GDP across the globe. Also, the specialty retail industry is highly fragmented and typically consists of a diverse range of products, from premium cigars to grave markers. Moreover, the rapidly rising middle-class population, well-developed credit and financing facilities, availability of a skilled workforce at a competitive price, and market-oriented stable economy are also expected to accelerate the growth of the specialty retail industry. However, this industry poses a few risks including high level of competition, price competition, a high degree of inflation, supply chain discrepancies, and inefficient inventory management. As a result of these challenges, leading players across the specialty retail industry have started leveraging the use of robust supply chain risk assessment studies. The supply chain risk assessment studies help companies in the specialty retail space to gain real-time and actionable insights into the flaws across the supply chain and devise effective strategies to stay agile and responsive in this dynamic environment.

With over 13 years of proficiency in offering supply chain solutions, SpendEdge helps leading companies operating in the specialty retail space to gain an end-to-end visibility into their supply chain processes and identify the potential risks that are likely to impact the growth of the business.

The Procurement Pain Point and Insights Offered

The client, a leading player in the specialty retail industry space with business units spread across geographies was facing predicaments in analyzing the supply trends, risks, and profitability across the supply chain. request free proposalAdditionally, the client was facing challenges in understanding their current state of the supply chain with respect to the import and export scenario. As a result, they wanted to gain better visibility into their supply chain operations and formulate strategic ways to mitigate risks across the supply chain.

To help the client overcome their predicaments, SpendEdge’s supply chain risk assessment specialists tailored an all-inclusive research methodology. The research approach comprised of primary and secondary research methodology coupled with qualitative and quantitative data collection procedures.

 Through the course of this supply chain risk assessment engagement, the client was able to identify and mitigate supply risks. Additionally, the client comprehensively collected, analyzed, and managed supplier information. This helped them deliver better product and service offerings to their customers.

Fundamental questions answered in this supply chain risk assessment engagement include

Business Outcome

The specialty retail client gained better visibility into their supply chain activities and devised robust measures to mitigate risks. Furthermore, the client implemented better sourcing and procurement strategies which subsequently helped them strengthen their supplier bond and save wasteful expenditures across the supply chain.

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IR33

Spend Analysis Helps a Specialty Retail Client Gain Better Visibility into Corporate Spend

Category Overview

The global specialty retail industry is anticipated to witness a modest growth owing to macroeconomic factors such as higher GDP, disposable income, and consumer spending. The specialty retail industry is highly fragmented and typically consists of automotive, specialty stores, and fuel retailing. Additionally, the rapidly growing middle class, availability of trained workforce at a competitive cost, market-oriented stable economy, and well-developed financing and credit facilities are expected to boost the specialty retail industry. However, according to the spend analysis experts at SpendEdge, it has been noted that the competitive rivalry in this segment is high and a medium barrier to entry. request free proposalFurthermore, the high degree of price competition, inflation, supply chain, and efficient inventory management is expected to pose a challenge for the industry.

Lately, the specialty retail industry segment’s supply chain activities have become more intimidating due to the constant pressures to decrease pricing and catering to the ever-increasing customer requirements. As a result, companies operating in the specialty retail industry space have started leveraging the use of robust spend analysis solutions to identify cost-effective measures that can help them meet the specific requirements of the customers seamlessly. Spend Analysis solutions also allows companies in the specialty retail industry space to measure and improve their business decisions across the industry.

With over 13 years of proficiency in offering a wide array of spend analysis solutions, SpendEdge helps companies operating in the specialty retail industry segment to reduce their inventory and maverick spends across the supply.

The Procurement Pain Point and Insights Offered

A leading specialty retail industry client with business units spread across several geographies was facing predicaments in supporting the particular sourcing needs for each line of business. Additionally, the client’s data warehouse system was the real source of time inefficiency for their indirect sourcing activities due to its inflexibility. As a result, the process for creating reports was complicated, manually driven, and time-consuming.

To help the specialty retail industry client reduce their inventory and maverick spend across the supply, SpendEdge tailored a two-step research method. The method included primary and secondary research coupled with quantitative and qualitative data collection procedures.

This spend analysis engagement helped the specialty retail industry client gain authority and ease of access to acquire valuable and credible spend data at any time with the help of smart analytics tools recommended by SpendEdge. The new analytics platform also helped the client transform their indirect sourcing team’s role from one of the support units to being a strategic consultant that provided actionable insights into the spend areas of the entire company.

Fundamental questions answered in this spend analysis study include

Business Outcome

The spend analysis engagement helped the specialty retail industry client in gained better visibility into corporate spend. This translated into cross-functional leveraging of supplier spend, contracts, terms, trends, and pricing across business units. Moreover, the suppliers have gained a better understanding of specialty retail industry client’s business requirements and are more aligned with their future business strategies and directions.

To know more about our spend analysis solutions

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