New research shows an industry on the edge, as retail profitability plummets
Retail industry faces tough prospects and will need to look at new areas to cut costs and boost profitability
The last six months have been among the most challenging many businesses have ever experienced, with 88% of retail and CPG executives surveyed stating that COVID-19 has had at least a moderately negative impact on the profitability of their business, with nearly 50% saying pandemic changes were extremely impactful.
According to a recent study conducted by LogicSource in partnership with Coresight Research, titled "Why Not-For-Resale Savings Could be Key to Unlocking Profitability", the industry is in the midst of a profitability crisis.
When executives were asked about how critical their financial situation is, 51% of respondents indicated the situation is more than "moderately critical", while 11% stated that their business may not survive if trendlines continue in the wrong direction.
The report authors discovered that amongst the crunch Not-For-Resale (NFR) expenses were often overlooked when attempting to boost profit margins. Nearly two-thirds of executives surveyed admitted the shortcoming, with 66% agreeing that "there is a lot more [their] organization could be doing to cut costs associated with NFR goods and services".
Of the respondents that have previously evaluated, or are currently evaluating NFR expenses, 65% experienced profit lifts of greater than 3%.
"There are opportunities for NFR savings in almost every area of a retail or CPG business, but the challenge is analysing those areas and determining which will result in the largest ROI with the least amount of internal disruption," Deborah Weinswig, Coresight Founder and CEO, explained. "It is important, especially in times of crisis, that retailers prioritize NFR and have a focused strategy for how to approach this analysis."