WAYSTOMAKEADIFFERENCEThisleaflethighlightsareaswhereretailersarefindingwaystomakeadifference–increasinggrowthandprofitabilityinthefaceofintensifyingcompetitionandmorediscerningcustomers.12345678910RaisenetmarginsthroughstrategicsourcingBoostshort-termrevenuescategory-by-categoryConvertplanningsystemsinvestmentsintoprofitsMaximisereturnsfromown-labelDrivebrandsformutualbenefitIncreasespaceproductivitythroughstoreclusteringTargeton-shelfavailabilitytocuremultiplesinsBuildloyaltyamongsthigh-valuecustomersAdoptfactory-gatepricingforbothefficiencyandeffectivenessPrioritiseglobalexpansion11FocusoncoreskillsandcapabilitiesContentsVolumeConcentrationBestPriceEvaluationSTRATEGICSOURCINGProductSpecificationImprovementJointProcessImprovementGlobalSourcingRelationshipRestructuringSourcingGroupsSupplyMarketCapabilityBusinessImpactNON-CRITICALLEVERAGE--+NURTURESTRATEGIC+WAVE1WAVE2WAVE3MKOQPNIJHGSTFECDABLowHighEaseofImplementationSavingsopportunityLM1StrategicSourcingSTRATEGICSOURCINGAPPROACHSELECTIONOPPORTUNITYPRIORITISATIONPROCUREMENTPORTFOLIOPOSITIONINGSOURCINGGROUPS1Aone-size-fits-allapproachtodealingwithyoursuppliersisunlikelytogetthebestoutofthem,orcreatecompetitiveadvantageforyou.Drivenbythecustomer,eachproduct/marketsegmentrequiresdifferentrelationshipswitheachsupplier:Price-focused,ormulti-dimensionalcriteriaforsupplierselection,e.g.,productqualityandinnovationResponsiveorjustcost-efficientsupply-chainsMeasuresandincentivestailoredtothesupplierroleStrategicsuppliersneedencouragementtoinvestininnovationforlonger-termgrowth.Alow-coststrategymaybemoreappropriateforcommoditysuppliers.Strategicsourcingexploresbothavenuesofimprovement(whetherefficiencyoreffectiveness-related).Retailermarginimprovementsfrom3%to5%forfoodcategories,from4%to7%forgeneralmerchandise,andmoreforclothingandfashioncategories(includinglowermarkdowns)arepossible.Providedtherelationshipisstructuredappropriately,thesebenefitsarenotattheexpenseofqualityofserviceorresponsiveness.RAISEnetMARGINSthroughstrategicsourcing£10£13£14£15£16£17£18£19£20£21£22£23£24£25£26£27£28£29£31£35£12£14£19£20£10£14£16£18£4£6£13£14£8£11£13£10£12£15£18£20£25£29£12£14£15£16£18£20£25OpportunityGapOpportunityGapOpportunityGapCompetitorsBACDEFClient10152025303540£/Unit501.0201.02CasualShirtsFormalTrousersAboveAverageBelowAverageImproveSales&MarginsLeveragePositionImproveSalesNightwearJacketsOuterwearSocksUnderwearSuitsCasualTrousersFormalShirtsLeisurewearKnitwearCategoryRelativeShelfProfitability£/sqfCategoryRelativeMarketShareImproveMarginsIllustrativeCategoryOpportunityAnalysis2COMPETITIVEPRICINGCOMPARISONSRELATIVEPERFORMANCEAdditionalsalesof2%-5%areachievableintheshort-termthroughabetterunderstandingoftheneedsofkeycustomersegmentsandthecompetitiveenvironmentofeach.Evenmoreispossiblewhenthisprocessissustainedthroughincreasinglevelsofsophistication.Categorymanagementcanrequireaslavishadoptionofprocess-intensivetechniques.Wefindthataseriesofpragmaticactionsismoreeffectiveatdrivingsalesandprofit.AssortmenttailoredtokeycustomersegmentsPricingreflectingcompetitionandcustomerbuyingcriteria—Entry-level—SpaceallocationbypricepointVisualmerchandisingwhichstimulatesratesofsaleandreflectscustomerbehaviourSelectivepromotionsandmarkdownswhichsuitbothcustomerandretailerneedsAchievingtheseimprovementsrequirescloseworkingbetweenbuyingandmerchandisingdepartmentsandstorepersonnel.This,initself,formsastrongplatformforincreasedsophisticationandfurtherimprovements.BOOSTshort-termrevenuescategory-by-category2Key:GarmentstreamFabricstreamOperationsstreamPackagingstreamDeciderangestrategySelectsupplierAgreetime&actioncalendarAgreesalesestimatesBookCapacityAgreetargetfirstcostsDecidedegreeofgarmentflexibilityDecidequantitiesbygarmentAgreecostpricesAgreeproductionplanConfirmcatalogue&launchdatesSetallocationtoliveConfirmreceiptsofgoodswithDCsInitiatelaunch&replenishmentReviewsalesestimate&stocklevelAdjustsalesmixAgreemanagementofredundantstockEvaluateSuppliersDeselectTier1DeselectTier2FeedbacktosuppliersAuthorisepaymentAgreecomponentryspectoputintoworkDecidepackaging&labellingFinalisepackaging&labellingOrderpackaging&labellingAgreefabric&specstoputintoworkAgreestylingfit&finishesSelectsamplesFinalisefabrics&getcostestimateFinalisestylingfit&finishesFinalisetrimsSelectrangeAgreecontractSealsPlacegarmentordersOrdertrimsAgreestockfitforsaleGarmentandtrimcolourapprovalChooselabdyecoloursFinalisecoloursOrderthefabricChoosetrimslabdyecolour211725203433272642291523114140393835322236371924653812162204303110182891713Criticaldecisionsinthebuyingprocess3CONVERTplanningsystemsinvestmentsintoprofitsTalentedstaffcreatevaluewhenfocusedoncustomers,productinnovationandcompetitivedifferentiation,ratherthanmundaneactivities.Supply-chainskillsarebetterappliedtoimprovedforecastingandclosersupplierintegration,ratherthantofire-fightinganddeliveryglitches.Merchandisesystemsmakeadifferencewhentheyimproveplanningandreplenishmentdecisionsaswellastransactions.Systemsinvestmentswhichneglectoneofthesetypicallyfailtodeliverb