The Retail Industry Could Save GBP6.1 Billion and Avoid 230 Insolvencies in 2010

LONDON -

- New Report Reveals it Pays to Collaborate, Rather Than Squeeze Suppliers

New research published today reveals the retail and wholesale distribution industry could unleash a staggering GBP6.1 billion per year (3.8% of operating costs) by agreeing better, more mutually beneficial supplier-buyer deals.

By thinking creatively about the terms involved in contract negotiation, suppliers and retailers could improve business performance, productivity and profitability.

The research, based on data from FTSE 250 and Fortune 500 companies, was carried out by leading retail industry consultants, The Gap Partnership and independent economists, Centre for Economic and Business Research (cebr).

By realising these savings, the industry - one of the hardest hit by the recession - could save 90 retailers from insolvency this year, and 230 in 2010.

Under pressure from cash strapped consumers, many retailers have focussed on cutting prices, putting suppliers under pressure. But if buyers work closely with suppliers to scrutinise terms beyond price - risk, payment terms, transport/delivery, distribution, promotions - the industry could save GBP6.1 billion. The FMCG sector could save GBP1.2 billion.

The report also estimates the central savings for British business is up to GBP75bn per year (3.9% of operating costs), which equates to a staggering 5.7% of GDP. The “Top Ten” sectors with the most to gain are:

1. Construction (GBP9.7bn) 2. Hotel, catering and pubs (GBP7.9bn) 3. Recreational services (GBP5.2bn) 4. Public administration and defence (GBP4.6bn) 5. Retail distribution (GBP3.6bn) 6. Health services (GBP3.4bn) 7. Computer services (GBP3.0bn) 8. Wholesale distribution (GBP2.5bn) 9. Ancillary transport services (GBP2.3bn) 10.Education (GBP2.2bn)

Steve Gates, CEO, The Gap Partnership said:

“With attention turning from recession to a new ‘r’ word, recovery, the future for the British retail industry rests on retailers and their suppliers taking a clever, collaborative approach to deal-making.

“By examining their deals closely across the retail chain, retailers and wholesalers can release significant and timely value. A more collaborative approach will allow retailers to offer their customers quality products at reduced prices. The ultimate winner will be the British consumer.”

Ben Read, Managing Economist, cebr commented:

“In difficult economic times, it is essential for British business to consider all avenues of cost-savings.

“Contracts negotiation is an essential function of this and though an important part of virtually all economic activity, it is a skill whose potential remains largely unlocked as a means of improving business performance.”

**NOTE TO EDITORS: Case study from leading UK retailer available upon request**

Further information and case study from leading UK retailer: Rebecca Glaze +44(0)20-7630-1411 / +44(0)7792-402-913

Source: The Gap Partnership

Further information and case study from leading UK retailer: Rebecca Glaze +44(0)20-7630-1411 / +44(0)7792-402-913