A new report from Intesource outlines three strategic changes that small and mid-sized retailers can put in place in an effort to battle shrinking profit margins and increased pressure and competition from big-box retailers.
The report, “Battling with the Big-Boxes: Three Strategies for Mid-Sized Retailers to Stay Competitive and Improve Profits,” acknowledges that competition from large, global retailers capable of leveraging immense purchasing power to dictate market terms makes it increasingly difficult for smaller retailers to compete on price and supply. It offers the following solutions for fighting back:
Explore new sources of supply. Finding products that differentiate brands and inspire consumer passion gives mid-sized retailers an edge over big-box stores. The revenue and branding payoff is well worth the time and resources to source these products.
Put pressure on suppliers. Even if suppliers meet your expectations, regularly challenging them creates opportunities for better terms and prices. Take direct items out to bid every other year, and indirect goods and services every year.
Collaborate and be creative. By working together closely, retailers and suppliers can develop unique arrangements and stronger relationships. Consider under-used strategies like formula-based pricing, long-term contracts and supplier consolidation.