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Delivering efficiencies in the Retail Sector

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Retail Solutions

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“Retail is undergoing a massive change, and there is a chance for new leaders to emerge and older brands to reinvent themselves.” Kristen Green

Our consultants will look into every aspect of your business, both present and future to deliver value through insight.

Find out more at

expensereduction.com

Future-proofing retail has never been so prevalent as the geopolitical scenes rapidly alter the nature of trading relationships, currency values and consumers spending habits.

Significant shifts in consumer spending and economic landscapes spell trouble for some retailers whilst creating sizeable opportunities for others. Successful retailers are the ones that update their business models to reflect the changing times and consumer behaviours, and these successors are (and will be) paving the way in this new era of retail.

The development of the internet over the last couple of decades has seen shoppers migrate online, creating a globally competitive market that provides ease for shoppers to compare and buy goods. The rising success of ecommerce has encouraged retailers to broaden their business across the web, resulting in the redefinition of their processes and infrastructure , whilst the brick and mortar stores who failed to reinvent themselves have suffered in its wake. Brick and mortar, for innovative retailers, is receiving a ‘face-lift’, offering connections to consumers through desirable in-store experiences, a trend that is expected to see stores turn into ‘guide shops’.

Future-proofing retail has never been so prevalent as the geopolitical scenes rapidly alter the nature of trading relationships, currency values and consumers spending habits. Complex, global supply chains will be the source of vulnerability for retailers, with delays or additional costs seeping up the supply system and tightening their margins.

A business system that is moulded by the diverse macroenvironmental elements requires companies to always stay one step ahead.

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Industry challenges Who are ERA

Internationalisation

& Evolving Models

Technological

Disruptions

Profitability &

Supply Chain Issues

Regulatory &

Consumer Expectations

Expense Reduction Analysts helps its clients get more from their suppliers, not only by improving the services that you receive but also by leveraging the best prices for them. Our team of specialists boast advanced expertise in many areas where you spend money, with a dedicated team who understand the evolving sector and the challenges that it brings for retailers.

This is evident in our proven track record which demonstrates how we improve the efficiency and profitability of organisations just like yours.

DFS was enthusiastic not just about the money that could be saved, but also about achieving the corporate goal of reducing waste and increasing recycling.

“I could not recommend Expense Reduction Analysts highly enough: they have helped us reduce costs massively.”Phil Johnson - Head of Environmental Services

The Head Office ‘zero to landfill’ target was a great start, giving our activities increased visibility and credibility. We then reviewed the waste produced by DFS warehouses, factories and stores, adopting a phased approach to change comprising ten different initiatives.

General Waste Collection Savings: 20%

Saving money, saving space, saving the planet

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Internationalisation & Evolving Models

The Solution

The web as a platform has provided a viable means to reach global audiences, seeing businesses take their stores online in an effort to widen their activities and increase their profitability. Product diversity has amplified with the internet, allowing customers to benefit from an array of retailers to purchase goods from; this shift, however, has ultimately caused higher competition in the marketplace for attractive price points that encourage brand loyalty.

A fruitful global expansion is not merely about making a website and hoping it extends to the masses through the strategies you apply. Operating in new markets requires a number of elements to work. These include local knowledge (inclusive of trade and compliance in opening shops and shipping product to foreign destinations), appropriate retail premises (where applicable) and a solid business model; those who have failed to make ‘bullet-proof’ expansion plans (with a thorough supply chain system) have suffered a costly and humiliating market exit.

Furthermore, consumer behaviour is a variable that changes from one country to the next, influenced by the different needs, culture and financial backing of the individuals in question. It is therefore illogical to think people from around the world purchase goods for the same reasons in the same ways.

Differentiation can come in the form of retailing innovations within diverse marketplaces– typically falling under three types of markets: mature, emerging and less-developed. Retailers who seek global expansion may consider adapting their goods to fit into all three categories (and therein lies the challenge). The more advantageous route is to design goods that cater to the three types, which has seen the emergence of value range to a luxury range of goods in supermarkets, for example.

Of course, expanding across borders is a major development for retailers. Success has come by tapping into emerging markets where the potential is greater, with a business model that is easily transferred from one place to another (and as long as the business understands they are catering to a new audience). The challenges, however, will come in the political, cultural, language and legal barriers that vary from their place of origin, as well as facing a foreign market with new (and possibly established) competitors.

A preliminary problem faced by retailers may be implementing the right practices and tools into a business. Businesses will often cite that their expansion plans have not panned out as expected, primarily because they have invested in the wrong tools or accounted for the new wrong system. This can often see them struggling to adjust to a new market and their way of operating.

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Successful globalisation involves two key elements: understanding the realities of overseas barriers to success and not forgetting to concentrate on the home market. Failing both can ultimately result in substantial costs.

For internationalisation to work well, retailers must ensure local knowledge is incorporated into establishing the models for international bases, and such data used for product development and customer analysis, as well as having access to experts (either staff or outsourced) who understand the market, supplier bases and structure, supply chain needs issues, consumers, competitors and products.

Advanced planning, regular reviews and keeping up with trends will help to navigate through complicated legal and regulatory environments in new markets, as well as ensure your business is in the best position to deal with any geo-political fallouts. Supplier relationships will be key to international success by establishing firm foundations for growth. Supplier relationship management (SRM) can be challenging to establish in a multifaceted supply system, and getting the best value from contracts can be problematic when you do not have the knowledge and/or experience to negotiate beneficial agreements across local markets.

This is where our specialists can step in to assist you. We have specialists within a range of categories you buy from that can help you identify areas where money can be saved, or there is potential for growth and innovation. We take a holistic approach to reviewing your organisation, taking an outside and expert perspective to highlight the opportunities you may have overlooked in your last review. We’ll compile recommended supply chain systems (with negotiated deals tailored to your needs that give you the best value for money) to help improve your profitability as an international retailer.

How has age e�ected consumer buying habits?

Millennials 47%33% 67%

44% 56%

59%

In-store

Online

41%

30%

13%

51%

38%

23%

Shopping online and collecting in store

How each generation shops

Would  nd an in-store visit more exciting if they used new technology

Generation X 1965 1979

1980 1996

Baby Boomers 1944 1964

How has age effected consumer buying habits?

Source: www.bigcommerce.co.uk

go.geteuclid.com/Evolution-of-Retail-Store-of-the-Past-Meets-Shopper-of-the-Future

“Online now accounts for almost 20% of retail sales, growing at ten times the rate of

store sales in the first half of 2018.”

How has age e�ected consumer buying habits?

Millennials 47%33% 67%

44% 56%

59%

In-store

Online

41%

30%

13%

51%

38%

23%

Shopping online and collecting in store

How each generation shops

Would  nd an in-store visit more exciting if they used new technology

Generation X 1965 1979

1980 1996

Baby Boomers 1944 1964

How has age e�ected consumer buying habits?

Millennials 47%33% 67%

44% 56%

59%

In-store

Online

41%

30%

13%

51%

38%

23%

Shopping online and collecting in store

How each generation shops

Would  nd an in-store visit more exciting if they used new technology

Generation X 1965 1979

1980 1996

Baby Boomers 1944 1964

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Regulatory & Consumer ExpectationsCustomer expectations have risen over time, with products expected to be high-quality regardless if it is branded, private or exclusive labels across all of their channels. This means that retailers are often left accountable for the supplier’s quality, with review systems and social media comments enough to sway consumers to buy or not.

Government and consumer bodies’ from several regions have enforced a stricter regulatory system to ensure higher standards of quality are met and protect consumer rights. Not to mention, the global push for corporate responsibility which has required retailers to look inward to ensure that their processes– whether it’s to do with labour, environment or product quality itself– are not negatively impacting their brand reputation and conversely their bottom line.

Quality is not the only expectations of buyers, with immersive experiences and emotions, as well as relatability, low or free delivery costs and ease of returns are often anticipated as part of the exchange in order to win consumer loyalty and if not managed effectively these will eat into margins and profitability. Retailers must maintain high levels of customer service through motivated staff, help centres and online chats, whilst delivering products (from online or in-store orders) to narrowing time-slots due to the expectations imposed by next day delivery advocates.

Trends also point toward a reboot of the brick and mortar store, where the shops act as more than just a place where consumers can purchase goods. Retailers have begun to incorporate brand experiences into the store model which allows customers to build a connection with their favourite brands. (These social experiences have been coined ‘retailtainment’). It is predicted that the future of the brick and mortar store will transform more into ‘guide shops’ where customers can learn and interact with the brand rather than a place that holds any inventory.

Technological systems can help retailers to manage, track, report and update their quality and compliance data to mitigate any problems that arise from regulations. Real-time findings can also be applied to the supply chain, helping to improve management and ensure retailers and suppliers can work together to cater to customer demands.

The Solution

It is, therefore, crucial to work with suppliers who you believe can deliver to requirements. At ERA tracking supplier SLA’s and KPI’s is the foundation of understanding which suppliers are best suited to meet our clients needs.

Review your business infrastructure, processes and supply chain regularly to ensure that you are meeting (or exceeding) best practices across the board.

Invest in technological aids to improve your customer experiences, utilising data to mould immersive experiences that encourage retention. Look towards those successfully engaging their customers, and those who are not, to decipher strategies to implement into your models. Connectivity and engagement may require additional budgets to achieve but can help to drive profitability rates. Furthermore, with the savings you gain from our procurement reviews, you can invest this “saved money” into further strategies for growth.

Quality is not the only expectations of buyers, with immersive experiences and emotions, as well as relatability, low or free delivery costs and ease of returns are often anticipated as part of the exchange in order to win consumer loyalty

Authors

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Ashley Long initially engaged Expense Reduction Analysts to review Packaging, Merchant Card Fees and Stationery/IT consumables. Savings were achieved in all areas ranging between 13-38%. Ashley was keen to retain the services of Expense Reduction Analysts once the initial term of engagement on these projects was completed.

“Our suppliers are very important to us and where possible we want to develop long-term relationships with all of them. ERA’s supplier management is second-to-none. Only when all other options are exhausted do they suggest a change in supplier.

I have been really impressed with not only the savings achieved, but also the depth of analysis work carried out by the team. The professional approach and extra effort ERA made ensured that quality and service levels weren’t affected at all.” Ashley Long - Finance Director

Copier Savings: 69%

Postage Savings: 40%

Banking & Cash Collections Savings: 61%

Designer profits for Paul SmithCA

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TUD

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Alfredo spent 12 years in Accenture working in the Automotive industry on projects supporting Dealer strategy where he was been involved with over 100 projects for brands such as Mercedes, BMW, Ferrari and Maserati. Alfredo also has experience in Retail, having owned and managed a chain of 6 shops.

Since joining ERA, Alfredo has focused on assisting the Retail market and worked with several

prominent companies within the EU, providing efficient solutions and large cost savings.

Prior to joining ERA, Keith worked for 18 years in retail estate agency including 10 years as a

Finance Director. Since joining ERA in 2015, his focus has been on the UK retail sector. Keith

now has a large number of retail clients which collectively comprise over 1,000 UK stores.

Keith has helped build relationships between clients and experts in the ERA network to deliver

value-adds across a wide range of areas.

Alfredo Longo

Keith McGregor

Henk has more than 30 years’ experience, in several management positions in international

wholesale companies. These include sales, marketing, purchasing, stock control, and the

management of international subsidiaries and 11 years as Managing Director.

He has also worked for European, American and Japanese companies, and managed

companies in the Netherlands, the UK, Italy, Spain, Germany, France and Poland.

hpostmus@expensereduction.com

Henk Postmus

David joined ERA in late 2018, after holding senior management positions for 27 years with

a family owned northern supermarket and he understands the challenges and pressures of

retailing. Combining his broad industry knowledge with great interpersonal skills, David is

well placed to assist in this sector. He has been concentrating a large proportion of his time

and energy within Retail and would love to see if we can add value to your business.

dramm@expensereduction.com

David Ramm

Kari worked for Exxon Corporation (10 years) with positions in Finance and Sales – primarily

covering Retail business of Esso Finland. Kari also spent 14 years at Inchcape as CFO and MD,

responsible for Mazda, Jaguar & Land Rover distribution and retail for Finland and the Baltic

countries.

During his ERA career he has worked with more than 25 Retail clients, providing substantial savings.

Kari Mattila

kmcgregor@expensereduction.com

alongo@expensereduction.com

kmattila@expensereduction.com

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Technological DisruptionsThe advancement of technology is allowing companies to implement efficient resource management and gain invaluable insights for future developments. Retailers, however, may struggle in expansion if the IT solutions are not tailored to every market accessed, allowing for more concise strategic planning at a globalised level and clear training across the board. This doesn’t mean that companies should get complacent with specific software, particularly as technology continues to advance.

Telecommunications and payment systems continue to thrive as an industry, presenting as a challenge for retailers to keep up with while also managing risk of change particularly where flagship stores are totally reliant for their payment processing. The increasing service options across several providers make a minefield that retailers have to navigate. Without the expertise and knowledge, retailers could establish a supplier relationship with a company that doesn’t match their exact requirements.

Electronic payments have increased in popularity, now playing a significant role in the payment system for the retail trade. Yet, it continues to evolve as the technology develops and regulations adapt, resulting in fluctuating pricing structures that retailers are tied to. 85% of executives believe that all transactions will be AI-based by the end of 2020.

Of course, executing innovative technology into business models is going to come with set-up and regular invoices for retailers. The marketplace for IT solutions is increasing in competitiveness, and complicated contracts could unknowingly be restrictive and unbeneficial for retailers, particularly as individual contracts or connections need to be arranged in the country in need of supply.

The evolution of digitalisation is providing a wealth of opportunities for the retail and distribution sector. Retailers must, therefore, make heavy investments within technology in order to maximise these chances opportunities for themselves.

Advances in technology can also help to construct more efficient supply chains by optimising communications and resource management, as well as helping to fast-track product cycle times to meet demands. The sharing of real-time information is encouraging flexibility and responsiveness in both supplier and retailer to make more informed decisions. Supplier relationships are crucial for the avoidance and quick resolutions of any issues within the supply network, and thus sourcing forward-thinking suppliers who understand your objectives must be prioritised.

Businesses are also benefitting from the transition between manual processes to automated ones that allow staff to focus time on alternative tasks. Automation is, and will continue to be, one of the priorities for retailers as the sector progresses. Retailers must keep their finger on the pulse of technology and look at ways to incorporate innovative processes not only into their own business models but into their suppliers. For example, the consumer-response systems that allow manufacturers to monitor sales in stores so that production and shipping can be planned in a direct response to consumer demand rather than based on predictions.

Due to the increase of the businesses who supply tech services and their abilities, you may be choosing between several providers who can offer varying package deals and you may not have the necessary expertise to determine which option delivers the best value that meets your short and long tern needs and objectives. Procurement specialists who have particular expertise in IT solutions will be able to provide the expertise needed to decide which providers and packages to choose and negotiating the best value from contracts.

The Solution

Telecommunications and payment systems continue to thrive as an industry, presenting as a challenge for retailers to keep up with while also managing risk of change particularly where flagship stores are totally reliant for their payment processing.

IoT, apps and new POS systems are allowing retailers to compile more data on their customers than ever before, presenting them with insights into consumer behaviours that can be translated both into product/service strategies and generating more personalised experiences.

A key difference between successful and unsuccessful global retailers is ultimately their practice of technology. It is apparent that those who research and implement innovative concepts and systems to improve both their infrastructure and customer experiences inhabit a stronger advantage in the marketplace. The barrier, therefore, comes in the resistance to adopt technological advances into the business model, the costs to apply or and risk if there is limited expertise in the area.

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Supply chain continues to be one of the most crucial parts of management, product planning and resources management

Profitability & Supply Chain IssuesAs consumer expectations of service rise, retailers are struggling to deliver because of the complex and disjointed supply chains. Competition, nowadays, is not just between brand and brand, but in the effectiveness of the supply chain to deliver, therefore making supply chain management a crucial part of retail success. This can be difficult when transparency practice, trade experiences and supplier knowledge varies depending on countries you are operating in.

Issues at the start of the supply chain can result in delays and complications within the production, manufacturing and distribution stages, making it extremely difficult for retailers to meet their quotas, CSR and quality expectations. This is particularly apparent in areas of retail for products with short shelf-life such as food. Planning is usually meticulous to ensure everything runs on time, so any last minute changes can have negative impacts further done the line.

Retailers are facing substantial challenges to maintaining healthy profitability rates. Besides technological disruptions, barriers in globalisation, shifting consumer behaviours and economic and geopolitical forces, increasing costs in areas such as fuel and energy have become major obstacles in operations. Energy, for example, continues to fluctuate in its prices, rising at unfavourable levels for many.

Rising costs coupled with uncertain global economy spells trouble for the bottom line. Consumers expectations for low-prices and high-quality compared with the rising costs in production and distribution is making it harder for retailers to sustain profitable forecasts.

While most retailers will be conducting reviews to assess their costs, more pressure will be placed on their suppliers and supply chain partners but this needs to be managed in partnership so that a healthy supplier base and relationship can be sustained. Packaging is one of the major areas of shipping cost for retailers but assessing and adapting your usage with and looking for better and more socially responsible alternatives could, in fact, deliver substantial savings whilst still ensuring retailers meet business goals as well as improving their carbon footprint. Disposal services, for another example, has some of the highest potential savings for businesses yet it is often a category ignored in evaluations of expenditure.

Managing rapid changes and unpredictability is difficult for retailers but essential in order to maintain efficient structures. Limited data and knowledge across the supply chain makes planning harder and can result in poor decision-making for the supply chain. Not to mention, dependency on old-school, manual methodologies in supply chain management that increase time spent on processes that could easily be automated.

The Solution

Collaboration is key to a successful multi-dimensional supply chain in order to move products across the line quickly. Trust and transparency are essential elements of an optimised supply chain, and thus require investing in suppliers you can rely on, time and time again. Trust within the retailer-supplier dynamic allows these connections to reach their full potential and limit the time (or eliminate the need) to monitor each other.

Working together ensures that the greatest value is given to demanding consumers, the collaboration between the two businesses is seamless, whilst also protecting the bottom line of both of your business and your suppliers. Cooperative systems between retailer and supplier are estimated to provide around $30 billion into the global industry by eliminating the middleman. By understanding our clients as well as the supplier market a key objective of ERA is to facilitate best practise and good supplier/client relationships spotting things that are often overlooked when viewed from only one or other viewpoint.

Consumers expectations for low-prices and high-quality compared with the rising costs in production and distribution is making it harder for retailers to sustain profitable forecasts.

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Minimani, a supermarket chain with a significant presence in the areas in which it operates, wanted to look at the costs of interchange fees. In addition to potential savings, the primary goal was to achieve transparency in the charges associated with payment cards.

“I really appreciate that ERA’s specialists carried out a thorough assessment for us; we would not have had sufficient resources to do this ourselves. We’ve learned a lot more about payment cards and the operators in the chain. The project also highlighted the need to adjust our operating processes, and this was another benefit of the collaboration.

ERA’s specialists are not afraid to dig deep and find out what’s what; they really work hard to find solutions. We felt that no stone was left unturned when they were exploring the areas in which savings could be made.”

Petri Hangasluoma, CFO, Minimani

Significant savings on interchange fees CASE

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2019 proved to be an interesting year for Retailers. The advance of technology has left consumers in the box seat with choice becoming wider in terms of both consumer items and procurement method. In-store and online, retailers are having to work harder to win market-share, work harder to understand new consumer behaviours and in several instances, work hard just to stay afloat.

Fashion, electrical goods and pubs suffered the most, as consumers shift from ‘going out’ to ‘staying in’; a trend that started several years ago. In the UK, concerns over Brexit have caused some retailers to panic; unfamiliar with new logistical demands and stockpile product unnecessarily. All of the commotion around Brexit has certainly impacted and whilst we’ve seen retailers fall by the wayside, issue profit warnings, or make redundancy, talk of the death of the high street is premature.

Only the most agile though, will survive; in an evolving high street environment it is essential to begin to:

• Play with your customer experience in-store, merging physical and digital to create a seamless customer experience,

• Invest in technology; online, AI, AR and visual design; make life easy and intriguing for consumers,

• With households continuing to be worse off than in previous years, consumer spending has remained at a relatively good level. This could worsen over the coming years so controlling input costs to remain competitive is vital.

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Why now?

Globalisation requires businesses to consider new markets, customers and barriers in order to alleviate the risks to their profitability. Regulation and consumer expectations are rising, from brand experiences and delivery demands to government bodies’ enforcing higher quality standards.

Retailers now have the capabilities to cater to such requests with the advanced technology that can help them automate and streamline their processes, as well as aid in immersive experiences for consumers. It is simply a case of retailers embracing new ideas, supply solutions and technology and using it in strategic ways. One of the first areas to address is the supply chain.

Before engaging with us, many of our clients felt that costs were managed to a satisfactory level, and was one of the many barriers which prevented businesses from being able to see opportunities for substantial improvements. We can help you guard yourself against obstacles that prevent you from achieving best value, whilst creating strong supplier relationships that last for the long-term.

The retail sector is rapidly changing, and industry capabilities along with it. Retailers who fail to respond imminently will be beaten in the competitive marketplace.

Our process is simple. Our specialists utilise the knowledge and experience they have gained over their careers to negotiate the best deals in areas of overhead spend where you don’t necessarily have specific expertise. We’re so confident in our ability to upgrade your structure for less find extra value that we will back ourselves to find the funds for our fees during the entire engagement. That’s right – there’s no up-front payment, and if we can’t save you anything or we find you’ve already implemented the best plans then we walk away without charging you a penny for the validation exercise. Should you need our help in the future, however, we would be more than happy to work with you again.

In an ideal world, this would happen for every organisation. But for more than 90% of our engagements, we find that organisations are overspending unnecessarily. We occasionally see that some organisations are being ripped off by their suppliers; other times, they could achieve better value in the long-term with a little assistance in certain areas.

With our ‘smarter-spending’ approaches you can reduce overheads, manage internal controls and external relationships to better effect. We run your organisation defined projects through our three-step process to extract deliver maximum value from within your processes, and we can continue to support you with regular reviews.

The great thing is that you don’t need any budget to begin. All you have to do is meet with us so that we can give you a breakdown of what we can do for your individual business and why with our help, your money can stretch further.

Process Model

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The retail industry is experiencing a golden era of innovation, so it’s more important than ever to understand the value of the possibilities available.

Our consultants will look into every aspect of your business, both present and future to deliver value through insight.

TM

expensereduction.com