Time to work on supplier relationships

But I think another board colleague will rise in importance over the coming months. Buying directors are hitherto unsung heroes, but I sense their time has come.

Theirs is not an easy life – clocking up untold air miles, but also countless hours in airport lounges. Some suppliers might allege that they spend that waiting time sharpening their finger nails.

2009 will bring a cocktail of pressures that will test the skills of buying directors. Putting together, six months ahead of time, a range for a UK consumer base whose tastes, or at least ability to satisfy those tastes, are evolving rapidly, cannot be a walk in the park.

Providing compelling entry-level merchandise, while seeding the range with nuggets that protect the overall pressure on gross margins – not easy.
But one of numerous critical shifts in the retail environment next year is the prospect of years of product deflation starting to reverse, and buyers having to contend with major inflationary pressures.

At last week’s Drapers Fashion Summit, the issues behind Chinese inflationary pressures were given an airing. A good buying director will have to be on top of the scope for re-sourcing both within China and into other Asian countries.

The other sea change that combines with this is of course the precipitate decline in sterling. The consensus at the summit seemed to be that retailers – or at least the garment sector – are on average hedged to approximately mid-year. So chickens will not finally come home to roost until the autumn/winter ranges. Hey ho, as Father Christmas used to say, before budget cuts reduced his reindeer fleet.

It does not take the imagination of Lewis Carroll to divine that there will be some very tense boardroom discussions in coming months, with chief executives laying down the law on how product pricing is going to have to fall to stimulate distressed customers, and buying directors having to educate them in the facts of 2009 sourcing life.

At the Drapers session, the advice of several brand and retail buying directors was to get ever closer to your suppliers (and perhaps to reduce that supplier base in order to enable closer relations).

The way forward is collaboration, in order to probe to the full the scope for product cost reduction. This may come uneasily to old-school buyers whose favoured approach was plenty of stick – preferably with embedded nails – and precious little carrot.

2009 will be the year of love: not just love for your customers, but love for your suppliers too.

Paul Smiddy, head of retail research, HSBC