As retailers feel the squeeze of inflation, CollectPlus chief executive Neil Ashworth argues the case for creative thinking to find efficiencies without compromising on experience.
Against a backdrop of a looming Brexit and the first annual fall in retail sales since 2013, the retail industry is experiencing inflation on a significant scale.
To succeed in the current tough economic environment, there is a demand on retailers to squeeze costs – and fast.
Some retailers are opting to protect customer pricing by resizing their teams and revaluating their store portfolios, and many are putting pressure on their suppliers to cut costs without compromising on service.
This move to slash supplier costs outright could end up being a double-edged sword – a decline in any retailer’s customer experience may well end up driving previously loyal customers to a competitor.
Suppliers experiencing this squeeze must maintain their core proposition to ensure their long-term survival.
At CollectPlus, we are seeing increased cost pressures across our network of over 7,000 stores, but this does not mean that we are willing to compromise on providing an outstanding service to customers.
“A decline in any retailer’s customer experience may well end up driving previously loyal customers to a competitor”
In my view, the retail industry needs to take a step back from short-term cuts and take a longer or more balanced view, developing strategies that will not damage long-term growth prospects.
Anyone can cut a supplier cost by demanding a price reduction or finding a competitor who’ll do the job for less. But it takes cooperation, insight and lateral thinking to find creative solutions that will improve efficiency – and this approach to relationships with suppliers is inherently more sustainable.
In tough times gone by, the businesses that succeeded made balanced decisions that served them well in the long run.
To get past the issue of pricing, suppliers and retailers must have constructive conversations about how to create added value within existing partnerships.
The onus for these conversations must be on both parties. It is in retailers’ best interests to ensure they are getting the most out of their suppliers when costs are under pressure, while suppliers may well discover that introducing these efficiencies will benefit their business in the long term.
Potential added value can be hidden in plain sight in many areas of a supplier-retailer partnership until these conversations take place, from sharing data and insights to co-promoting services to customers through marketing channels – something we have regularly explored with our client Asos.
During the summer ball season at universities, we executed a joint campaign with Asos by offering students the opportunity to win vouchers at the retailer with amplification across our social media platforms, and we even installed a branded photo booth at Leeds University’s summer ball, which we co-sponsored.
“To get past the issue of pricing, suppliers and retailers must have constructive conversations about how to create added value within existing partnerships”
In addition to jointly seeking these extra efficiencies, suppliers must continue to deliver on their programmes of innovation which retailers can offer their customers as a value-added service – a squeeze on costs shouldn’t mean a squeeze on progress.
Introducing products and services can add value to a supplier’s proposition. For example we have seen a fantastic return on investment following the launch of our recent partnership with Gett Delivery.
The retailers and suppliers that work harmoniously to find efficiency and co-create value – while staying true to their core proposition – will stand the best chance of surviving the tough economic climate.
If we continue to deliver on our core proposition and maintain a high-quality service, consumer loyalty will follow and persist.
Neil Ashworth is chief executive of CollectPlus