Chains could increase profit by 4.8 per cent through better buying, say directors

‘Mediocre buying teams cost retailers £1.3bn in lost profits’

"Mediocre" retail buying teams are costing the UK retail sector £1.3bn in lost profits, according to a survey from Inverto.

150 UK retail directors questioned by the international management consultancy say profits could be increased through better buying, and that a ‘perfect buying team’ could improve margins by 4.8 per cent.

Richard McIntosh, UK managing director of Inverto, said: "Retailers need to stop and think. In the current economic climate, growing top line sales is hard. For the typical retailer, a one per cent saving in costs provides the equivalent EBIT impact of a 12 per cent increase in sales, so the way they buy deserves attention."

McIntosh revealed that 90 per cent rate their buying team as ‘better than average’, while 70 per cent say they’re "getting better terms than their competitors". 

"This cannot be true," he added. "Retailers are deluding themselves."

Almost a quarter of retailers said that increasing the range of suppliers would improve the performance of procurement. Indirect spend on goods and services not for retail, like marketing and facility management, account for up to one tenth of an average retailer´s turnover.

Inverto claims managing indirect spend effectively saves its retail clients 12.4 per cent on average.

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