A company’s reputation is a dynamic asset that is earned and shaped each day as customers constantly re-evaluate what is most important to them.
In retail especially, with consumer tastes and preferences constantly changing, demand for product transparency at an all-time high, and expectations for sustainable business practices rising, the standards for earning and keeping a positive brand reputation are much higher – and so are the stakes. Buying the wrong goods and services, or the right ones from the wrong suppliers, can directly influence the external perception of a company’s brand.
Knowing what you’re buying and from where and which suppliers helps inform better buying decisions that lead to greater customer loyalty, satisfaction and a solid corporate reputation. In fact, despite a relatively bleak outlook for the retail sector, TJ Maxx has grown its brand value by 79 percent
over the past year by offering high-end, quality products at affordable price points.
Retail Differentiation Stems from Smart Procurement Strategies
What steps can companies take to emulate TJ Maxx’s hike in brand value? Success starts with a smart, holistic approach to procurement that allows retail teams to differentiate on product and price. Having the right mix of best-in-class technology, skilled people and resources can help retailers navigate external pressures that threaten brand image. There are a few critical procurement strategies that will bolster the supply chain and strengthen the brand at the same time:
1. Take the most important items out to bid.
Some feel this is an unwise business decision, fearing it will alter product quality and risk customer loyalty, but the result is the exact opposite. By sourcing critical categories on a regular basis, teams gain clearer insight into these products, the market conditions surrounding them, and if there are any opportunities for innovation to take advantage of. You can’t bring a better product to market if you don’t know what’s available. And when companies stick to the “if it’s not broken, don’t fix it” mantra, they risk overlooking changes to consumer preferences.
2. Get product specifications right from the beginning.
When companies don’t understand what they’re buying, it makes it difficult to compare supply options and understand exactly what they’re delivering to the market. With the right procurement partner and approach, companies can communicate product specifications with suppliers more easily and get a birds-eye-view of what types of supply, prices, quality and contract terms are available to them. They can then use this information to choose the supplier that best fits the profile they’re targeting and source high quality, innovative products that will capture customer loyalty and contribute to a positive brand image.
3. Invest in supplier relationship management
. By managing suppliers effectively, companies can avoid unexpected disruptions to their supply base, such as shortages, food quality issues or unethical sourcing practices. By knowing your suppliers inside and out, and asking the right questions at the outset of your relationship, you can gain insight into the amount of risk they carry, enabling you to make changes that could mitigate potential reputational issues down the road. Gaining transparency into your suppliers is critical.
The way an organisation brings products and services to market can make or break its brand image. With the right procurement strategy, companies don’t sacrifice quality for a lower price, risk shortages over consistent supply, or relationships over process. Rather, they get an approach that aids in smoother go-to-market strategies, creates a competitive advantage and helps companies stay in consumers’ good graces by assuring delivery of the exact products and services they want.
Find out more about Spend Control and eProcurement strategies for the retail sector >>