The UK’s leading grocery retailers could lose money due to a failure to work effectively with suppliers, according to a retail technology consultancy.
After Lidl abandoned its €500m attempt to implement SAP (system application and product) technology across its supply chain in July 2018, Solutions for Retail Brands (S4RB) has warned that other supermarkets are at risk of losses of hundreds of millions of pounds as a result of failed implementations.
James Butcher, S4RB’s Managing Director, said: “Every retailer is currently restructuring their commercial and own brand teams and the pressure is on to deliver on this investment. Own brands are increasingly where retailers are doing battle.
“The major grocers are great at developing an own brand strategy, but the real challenge is getting the new systems and management structures to operate effectively, and this is costing them huge amounts of money each year.”
The consultancy, whose clients include Walmart and the Co-op, calculates that a 10% loss of productivity across own brand teams, which can number around 400 people in the ‘big six’, could cost retailers more than £2m a year on resource alone. This is without considering the increased risk of failed product development, longer time-to-shelf, and the compliance and product safety risks directly attributed to inefficient interactions between retail teams and their suppliers.
Butcher added: “The most important part of a successful implementation is engaging with suppliers and this is where many retailers are falling behind. The key is to create greater accountability and ownership on engagement with suppliers to create a leaner own brand operation.
“Most retailers cannot physically cut anyone else from their commercial and own brand teams so a failure to deliver on own brand strategies could put senior management in the firing line.”
