#RetailEXPO19: Working with smaller suppliers requires risk evaluation

Retailers have to increasingly drive innovation through their businesses and the obvious route is by tying up with smaller agile providers. However, care must be taken in selecting the right company and considering if it is a better option than sticking with the incumbent supplier.

Nigel Roy, head of procurement at Primark, said: “Large legacy suppliers are a safe bet whereas small companies are a risk – both corporate and financially. You need to weigh up the risk.” This is even more acute when considering core systems and outsourcing to the cloud, he added: “It’s very risky throwing out the ‘crown jewels’ and moving to Software-as-a-Service and the cloud. It might simply be easier to leave things alone.”

For Andrew Jackson, head of retail technology Europe procurement at BP, one of the risks is the ability of the smaller providers to scale up. “They often have a problem with this. They have the passion but if they have a piece of technology and you cannot then deploy it, it becomes a problem. Is it actually going to be profitable?”

Whichever providers retailers now work with, there has to be a recognition that the relationship will be dynamic. “Retailers need to select partners rather than suppliers. You want someone that can grow with you. There is now a speed of change and things are outdated so quickly,” said Jackson.

John Holt, COO at Timico, agreed: “We would not set up an arrangement with a retailer that’s monolithic as change now happens very quickly. Our customers now need to respond quickly to this [fast-moving environment].”