GNFR: The Great Retail Re-think
A Proxima briefing on the Retail Sector
By Edward Winterschladen, Executive Vice President, Europe
Whichever end of the spectrum your retail business is at, there will be a lot of big choices ahead. Most retailers will emerge from COVID-19 looking very different from how they entered it. A forensic understanding of your GNFR costs and a plan to reduce and control them could make a critical difference.
What’s more harnessing the power of your GNFR suppliers can enable innovation and improve the customer experience.
How many times have you looked at another business or retailer and thought “that’s clever”? How often have you had something delivered and thought the service was great or the packaging innovative. It is most often suppliers that are making the difference and helping build your customer experience.
In the battle for retail revenues, GNFR (Goods Not For Resale i.e. any goods or services bought by the retailer but not intended to be sold to customers) is a possible competitive advantage that often gets forgotten. Nonetheless, it’s one that could make a significant contribution to the experience you offer as a retail brand.
Read on to explore:
- Why GNFR is integral to the retail customer experience
- How GNFR could save you money or add value
- 10 Examples : How retailers are using GNFR to win
Optimizing your customer experience in retail through GNFR
Retail brands cannot afford to ignore the experience they offer customers. That experience is often defined by GNFR suppliers, so procurement decisions have a massive impact, whether it’s the cleanliness and safety of the store or the ability to offer free returns.
Retailers need to consider how GNFR affects the customer proposition. It’s likely that you have external suppliers involved in many, if not all, of these:
- Supply chain and logistics
- Marketing and advertising
- Creative and product teams
- Store environment and aesthetics
- Product displays
- Point of sale
- Data capture
How much is customer experience worth to retailers? Well, the GenZennial generation (those born after 1995) will make up 40% of consumers in 2020. As digital natives conscious of sustainability, they are likely to make more of their shopping choices based on these drivers. Retailers will need to adapt to survive by satisfying their demands.
If you would like to read more on this subject then our white paper expands on each of the elements we have explored here.
Cost savings for retailers from GNFR procurement
GNFR typically represents 15% of revenues – far less than is spent on products for sale. However, it may represent a far greater short-term margin opportunity.
Evolving supply markets mean a chance to cut costs, but also to seek and grow new partnerships. The chance to innovate – added to the growing value of customer experience – means that it would be a mistake to not to focus on GNFR and the right suppliers. With average retail margins around 2.5%, many retailers are looking for a reduction in costs. Procurement gives them direct control over the potential to find this, so GNFR is the ideal place to begin.
10 Places to begin implementing your improved GNFR strategy
Going green will be a major draw for new generations of consumers. New Corporate Social Responsibility (CSR) legislation will come into effect in 2020, but it’s well worth adopting the mindset that CSR is part of the customer proposition. Procurement taking ownership of CSR looks to be a coming trend, while major retailers seek out new systems to help them deliver on sustainability.
Although retail is in recession and advertising spend is often the first to be reduced, is cutting your marketing spend a false economy? BooHoo triumphed in UK Christmas trading in 2019, with its marketing spend more than twice that of a close competitor. Modern procurement is about smart investments, not just smart savings.
Bricks and mortar construction
Revising the way you run store builds and refurbishments could save you time and money. Instead of focusing on price, you could look at market benchmarks and supplier knowledge. Taking a more systematic approach and collaborating more closely with suppliers are two ways you could dramatically increase efficiency and reduce build time.
Fit out and refurbishment
The fit out (or refit) stage will necessarily mean a rise in overheads, but choosing well could mean savings in the longer-term. You might be able to shorten the replacement cycle or optimise your energy use – and therefore your sustainability credentials – based on the fittings you select. You could also increase operational efficiencies during this stage, such as planning how to incorporate distribution hubs.
Are you managing store maintenance as effectively as possible? Do you strike a balance between pro-active and re-active maintenance? Perhaps you use data, but have you ever looked at the gains to be made from bundling/unbundling certain services? It may be that you could gain from reviewing how efficiently your suppliers operate.
Consumers are making choices about where they shop based on how stores are adopting COVID safety measures – demonstrating an understanding and compliance of the measures by adapting stores appropriately should be front of mind for retailers. Those who put systems in place to ensure customer safety is a priority will thrive and drive footfall – whether it’s implementing efficient movement, organising clear queuing or clearly communicating sanitisation levels and procedures in store, customers need to feel safe coming through your doors.
Could you offer a swifter, more streamlined, safer payment experience? Improving efficiency here offers a clear boost to customer experience. That may mean cutting queue length or investing in today’s increasingly innovative touchless payment systems.
How can retailers offer their customers optimum service in the delivery stage? It comes down to addressing pain points, like what to do when no one’s home to accept delivery or even putting groceries away. New partnerships and even smart systems could optimise the last-mile delivery stage.
The high cost of returns is a pressure worth around £60 billion a year to UK retailers (even before the COVID lockdown). Amending courier agreements could be one way to cut costs. However, there are other measures to improve cost-effectiveness, such as greater use of data to understand customer behaviour and changing pricing/returns strategies.
Back office optimization is always an obvious target for improvement, whether it’s a digital transformation or maintenance. However, attracting and retaining the best talent is another crucial issue and a great example of the power of GNFR: the days of outsourcing as a cost reduction may well be over, while employers are coming to understand the power of creating appealing, comfortable working conditions.
Talk ‘The Great Retail Re-Think’ through with one of our retail consultants
We would welcome the opportunity to understand what you may be looking to achieve in the areas of customer experience and improving margins. We have a number of examples of how we’ve worked with Retailers in these areas and can share some of the benefits they derived. Please complete the short form and we will get one of the retail team to contact you.