UK grocery group

Creative solutions, suppliers aligned with business outcomes and collective action.

The situation

Food retail is an incredibly competitive business, with tight margins and a high premium on an ability to flex around rapidly shifting customer spending habits. For this national group, then, the first priority was cost saving. But it needed to be able to deploy those savings in an effective and efficient manner towards broader strategic aims, too.

Businesses with this kind of scale – and with hundreds of large and complex sites to run – inevitably present opportunities to find new ways of working, both internally and with the supplier eco-system. This group also needed much better visibility into its own risk profile and heightened forecasting abilities, especially as it expanded into new, more responsive, formats.

The solution

The group treasury function was adept at managing financial risks, but lacked visibility into the trading department. Proxima identified that better hedging of food commodity prices – rather than relying on historic market changes – would not only generate savings, it would allow for more secure planning in a host of other areas.

Better forecasting frees up investment cash – but that should be spent wisely, too. Proxima helped the new-stores team identify relatively straightforward cost savings in areas like lighting and flooring. But changing approaches in both categories had wider strategic benefits. The cheaper, lower running cost lighting also consumed less power, boosting the group’s low-carbon efforts. And as well as driving a better deal on unit cost for flooring, Proxima rationalised the supply chain and negotiated a change to the terms of supply, ensuring no store build-out would ever be delayed by stock issues with tiles (as had been the case previously).

The result

Catalytics© is valuable to any organization. But large and varied businesses like a supermarket chain are ideal beneficiaries because once opportunities to break down silos between different locations and types of business are uncovered, the benefits – in terms of cost, efficiency, revenue and strategic alignment – are leveraged up. In this case, Proxima helped reduce new store build times from 27 to 24 weeks; delivered multi-million pound savings on input costs thanks to related commodity hedging.

Finally, as a result of breaking down silos across the business, Proxima realised that in-store bakeries and regional abattoirs were generating a lot of waste products. In fact, third parties were already taking those away for animal feeds and other uses, but they were capturing all the value. Proxima analysed this onward supply chain and turned these waste products into a revenue generator of USD $253,000 (£168,000) per year.