Grégoire Baudry: Better Procurement in Retail Through Fact-Based Negotiations

Successful retailers save on costs by looking at consumer behavior through the use of data and advanced analytics. Grégoire Baudry, a partner with Bain’s Performance Improvement practice, describes how retailers can improve their bottom line by taking a three-step approach to engaging with consumer goods companies.

Read the transcript below.

GRÉGOIRE BAUDRY: Retailers these days face very difficult times. Growth is anemic. Costs are rising. Consumers are moving from one retailer to the next. The first thing they look at when they look at their P&L, they look at a big chunk of cost, and they say, "How can I get this cost out?"

The reality is, to buy well, you need to sell well. And successful retailers look at categories, look at what is the consumer behavior, and from there on start to think, "OK, what do I need to buy?" Successful retailers look at their facts in a very new way, using advanced analytics, using every kind of data that you can think of, from consumer angle to transactional data to panel data, and build a fact that allows them to engage with the consumer goods company in a win-win situation.

So from there on they then start to think, how do they want to grow the category? How do they want to grow their business? And what do they need from consumer goods companies to be able to convey that to the consumer and to convey that to the bottom line?

Successful companies tend to really follow three steps. Step one, get the facts right. Step two, engage in a collaborative, win-win situation with selected consumer goods companies. And step three, engaging in a process to get results down the bottom line.

This is not a simple journey. It does take time, and you need to think through how you want to make that a program that will engage the whole organization over time.