The big freeze has caused a slow start to this year’s festive spending spree and threatens to impact heavily upon the high street and online retailers sales this year. Although indications so far suggest that sales in general have risen* in comparison to last year, the severe weather that has spread across the UK during December raises concerns throughout the industry that anticipated sales figures will not be achieved.

The brief thaw may have pulled back some of the lost revenue, but with the return of severe weather this week, delivery delays and cancellations are rife amongst the high street, online retailers and supermarkets alike. Hidden costs and losses will potentially be realised from perishable goods, warehouse storage and maintenance costs and possibly additional resource costs that may be required to tackle the back log of deliveries and sales.

The reliance on sales revenue is a key for retailers and in turn the effective negotiation of margin lines on goods for resale is without argument an efficient area of the business, yet if an organisation is centered predominately around this area, the opportunities to reduce costs and make savings in operational areas can often be overlooked.

Considerable savings can be made in the goods not for resale areas including stationery, uniforms, facilities management services and even carrier bags, but can be overlooked by retailers who focus on driving margins from the goods for resale side of the business. We have seen retail clients effectively use reverse auctions to drive savings from indirect categories with savings of up to 38% in some areas.

The High Street will undoubtedly see the effect this cold snap has had on its bottom line in the New Year, but these severe weather conditions and the impact it has caused serve for a real reminder that retailers (and other industry sectors too) need to drive costs savings and efficiency through all areas of direct and indirect spend to help weather those unforeseeable storms!

Read more about this issue in some of our recent news items:

»        The other Side of the Coin, Daniel Ball’s interview with Retail Technology

      »        How Thorntons extracts ‘significant savings’ from online auctions

 *According to figures from the British retail consortium