Green Shoots & New Stores
Is it possible to see the first green shoots of recovery for retailers in the UK? The recent better-than-expected news around increased footfall and sales figures have increased optimism. The news of planned new store openings for high street regulars such as M&S, Monsoon, Primark, Dune & Flannels, not to mention the expansion of brands such Asda Express, Ikea, Lidl and Aldi there certainly appears to be a rosier outlook.
There is also a move within the UK to expand specialist experiences within stores. Whether on the Primark & Greggs partnership model or the recent Tesco and Toymaster collaboration these changes point to more positivity. This all leads to a healthy shop fit-out and refurbishment market during the recovery.
Our Chief Operating Officer, Rob Froome, outlined some of the main factors to consider when embarking on a fit-out or refurbishment projects. He also provided some insight into a selection of the projects Ebit have worked on.
How is Procurement Involved?
Clients may have an experienced team in place that already maintain multiple properties. This team may have previously worked across multiple fit-outs and refurb projects, they are entirely comfortable with many elements. Starting from specification through the process of fit-out to the ongoing maintenance of property . Or they may not be.
Some have worked with a Main Contractor to provide a full turn-key solution. This provides the security that the contractor will deliver a fully functioning site. A site ready for the team to occupy and start trading.
For many, however, the approach taken is a hybrid of the 2, with some inhouse expertise used alongside a main contractor. The procurement expertise brought to bear will normally be around some of the main capital areas involved, namely;
- HVAC
- Flooring
- Lighting
- M&E Contracting
- Audio Visual Fit Out
- Signage
- Furniture
What can procurement bring?
Structure:
Is working with 1 main contractor the right approach? It can add risk to the project if there is a programme of refurbishment or fit out across multiple sites. There may be multiple formats within the programme. Will different contractors offer better results based on specialisms or geography?
Ideas:
By focussing on the overall programme of works, Procurement can identify areas where new ideas and changes to existing thinking will offer better value. Is a refurbishment opportunity the right time to change the lighting for the existing property portfolio? (The answer is Yes if you haven’t done so already, the environmental savings and capital payback costs of less than 2 years for the switch to LED are proven). Can you work with other suppliers to identify value engineering opportunities? Will sourcing locally reduce carbon emissions and provide the same goods for the same total cost? Are there new products and services that have come to the market? Will these offer better value?
Ongoing Value:
Cost of fit-out aside, the handover of warranties and contracts to facilities and property management teams is often an opportunity for information to be lost between the cracks. Effective contract management can mitigate against this, ensuring all parties have access to relevant information in a timely manner. This will also also help ensure that ongoing services and contracts remain compliant, ensuring your team can effectively manage and renegotiate contracts in a timely manner as they are due to expire, avoiding any out-of-contract price increases.
Our Experience
We have worked with retailers, restaurant groups and entertainment venues as they approach and review their major fit out and refurbishment projects.
Leisure & Restaurants
Following a programme of expansion we assisted a major UK group to identify their cost of fit-out. Initially undertaken across a sample of their new venues we then compared this to the average cost for their peer companies. As a turn key delivered project costs were expected to be slightly higher. This Macro review revealed that their fit out costs were on average 20% above market rate.
Subsequent research and benchmarking identified multiple categories and opportunities for ongoing savings. This led to identification of increased risk within the existing structure and supply chain. Across the main spend categories the savings per project were identified as;
- Main Contractor 25% c.£35k per site
- Mechanical & HVAC 25% c.£30k per site
- Electrical 18% c.£10k per site
- Equipment 6.5% c.£7.5k per site
- Signage & Graphics 21% c.£2.8k per site
- Furniture & fittings 23% c.£11k per site
With this project we also assisted our client to identify and implement best practice across multiple areas, improving their processes and outcome. This enabled their executive team to implement the required changes to manage more of the project internally.
Retail
We have also worked with a UK fashion retailer across their portfolio of stores. Focussing on the shop fit-out kit and lighting costs as part of a refurbishment review. We were able to identify savings of over 70% in both categories. Identifying and implement energy efficiency measures further added to their Carbon Reduction targets.
Another project recently saw us paired with a leading homewares retailer as they expanded their footprint. Again focussed on the shopfit element of the project we assisted across multiple categories. By benchmarking against market data we were able to identify and implement savings and implement areas for process improvement.
If you are looking to expand your network of sites Contact us to find out how we could help your business too.
Whilst cost savings are at the forefront of our services we always look to add wider value. Whether contract enhancements oi supplier engagement and management. This ensures that the services delivered with our clients offer the best solution for the long term.
With a team of Category specialists as well as Generalist procurement support available we can assist your business to adapt and thrive.
For more information on the clients we work with and the services we offer click here