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Retail Technology, Retail technology News

Retail IT should drive a harder bargain, survey finds

Tuesday June 28 2011

A massive 81% of retail organisations could save money by bartering harder according to benchmarking tool

A massive 81% of retail organisations could save money by bartering harder according to benchmarking tool


Retail organisations are wasting millions of pounds on IT purchases as buyers struggle to achieve best value and transparency on purchases amid a highly volatile IT marketplace, according to a survey by ICT benchmarking tool Mercato ITelligence.


The research found that 81% of organisations were not getting the deal they thought they were and some were paying margins up to 474% on specific items.


It said with the total UK IT spend estimated at over £100 billion, organisations were unwittingly wasting considerable amounts of money. The research found that the public sector was a regular loser when it came to securing genuine ‘best’ value.


At a time when organisations are striving for more efficient methods of securing best value across all purchases, Mercato ITellignce concluded that buyers need to better police their supplier agreements and spot-check purchases to ensure best value purchase after purchase.


But the research found that buyers rarely manage to find a genuine benchmark price on products as the market is so volatile and this means they cannot negotiate price down as effectively with suppliers.


Deciding on a starting price


The Mercato ITelligence survey evaluated over 1,000 organisations with a budget over £50,000 and perceived supplier relationships of between cost +3-5%. The survey took regular purchase product prices from each organisation and compared them with trade guide price and current stock levels. Organisations across a number of sectors were found to be consistently paying anything but pre-agreed or perceived margins.


Al Nagar, Mercato head of benchmarking, said: “Negotiating best price on every purchase is a necessity in the modern economy. But a volatile market, where price and stock change regularly, is challenging buyers looking for value on every purchase. At the core of this issue is that buyers rarely manage to find and use validated trade price as a ‘bartering’ tool with suppliers.


“As a champion of fair deals for IT buyers, Mercato ITelligence has demonstrated that IT deals are not as sharp as buyers want or perceive them to be. ICT bought at better prices will enable a buyer to stretch the reach of their budget to get more or better ICT for the same money. This means higher volume for the supplier and better fairer deals for the buyer: a win-win [situation].


“Organisations are overspending on their IT as a result of the radically fast moving market and this is hitting bottom lines at a time when many are fighting to become more efficient.


“For genuine best value, buyers need to police and benchmark purchases.”