Maintaining profitability in the retail sector

The retail sector is currently facing extreme pressures - with globalisation, consolidation, divestment and acquisition activities adding to the accelerating complexity. Customer demands are increasing at a pace never seen before and competition has become more intense, particularly with the sub-prime crisis negatively affecting Western world spending. In addition, the implementation of new technologies such as electronic fund transfer, self-scanning point of sale and the increasing use of web-purchasing with all its associated security issues, has meant that, until recently management time has largely been devoted to front-office business issues and processes. The back-office has been seen as a supportive overhead.

Retail organisations are beginning to look more carefully at back-office functions not only to support front-office initiatives and processes, but as part of a cost reduction strategy to shore-up profitability at a time when top-line performance is static or in decline. There is also an increased interest in back-office transformation as an enabler or facilitator of rapid response to market changes and demands; such as entering new geographies, early adoption of new purchasing trends (internet, mobile, self-scan) and other competitive advantages stemming from instant feedback and real-time customer / competitor information, improved planning and execution and data leverage.

It is our view that the conditions are now right for the Retail Sector to re-examine the role and cost structures of the back-office; redefining the balance of in-house and external resources, taking advantage of the innovation, capacity and experience that the service provider community now has and provide better services for less cost. This review process can be a relatively short exercise and comprises of phases one and two of the EightyTwenty Insight methodology.

For more information on how we can assist you, please download the 'Can innovative sourcing enable retail sector profitability?' document or contact us.