World’s Leading Retailers Grow Despite Recession, But Profits Take A Hit….

2010 Global Powers of Retailing, from Deloitte Touche Tohmatsu, shows that the global recession affected retailers' profitability at the largest 250 retailers in the world fell from 3.7% in fiscal 2007 to 2.4% in 2008.
Threat 1: Anyone managing these major customers knows that they don't do 'reduced profitability'.

The Report said, "2008 has been a tumultuous year for the global retail industry. Sales growth slowed and profitability fell, sharply for some. Many retailers 'bought' sales with heavy promotions which hit the bottom line hard. However, we are already seeing evidence that as economic recovery takes hold around the world retailers should be able to return to a path of improving profitability."
Threat 2: Retailers don't always 'buy' sales via their own pockets
Threat 3: Retailers don't always await economic recovery to improve profitability

The composition of the Top 10 retailers in the world remained the same this year. This group now accounts for over 30% of the total retail sales of the Top 250 retailers. Wal-Mart Stores remained the world's largest retailer, ahead of Carrefour. Despite Tesco’s better sales growth rate, relative currency strength against the US dollar enabled Metro to climb above Tesco, back into third place.
Threat 4: Tesco did not get where they are today, to meekly surrender global third place to Metro

Add to these four threats the implementation of the Groceries Supply Code Of Practice due on 4th February 2010 where UK retailers will need to recoup losses on payments no longer allowed…
Threat 5: This means that concessions on margins, credit periods, settlement discounts, rebates, promotional support, trade funding will be probably be re-negotiated to replace any retailer losses on payments no longer allowed (such as shrinkage allowances, space-costs, retros, etc.)

Now ask yourself if it is likely that it will be 'negotiation as normal' over the coming months?

Action:

1. Revisit the Cost & Value of every aspect of your trading relationship with major customers
2. Re-assess your team's ability to calculate and demonstrate the financial impact of your brand offering on the customer's profitability
3. Prepare for your toughest negotiations ever…
4. If in any doubt, please re-read Threats 1-5 above…
5. Find some short-cuts via NamCalc