National Grocery Retailer – Private Label Sourcing
Our structured sourcing program delivered substantial savings for a major national retailer.
Situation
A major Australian retailer had developed an extensive private label range supported by a brand that was increasingly trusted by consumers.
The rapid expansion of the range in recent years had meant that products were often sourced quickly from a limited pool of suppliers.
The retailer was experiencing strong growth in private label, but decreasing prices in response to strong competition were impacting margins and creating a need to address the cost of the range.
Our Approach
A review of existing practices found that responsibility for product sourcing was shared between the trading teams and the product development teams.
There was an ad hoc approach to sourcing and limited focus on cost.
A benchmarking exercise found that the cost of private label products was potentially a competitive disadvantage for the retailer. From this, high value opportunities were identified and prioritised.
Results
A structured sourcing process was implemented and a centralised procurement team was created in order to maintain a permanent sourcing capability.
The project conducted almost 30 market engagements across a broad range of product categories, addressing over $1bn of spend and delivering significant annualised savings.
