Improving store profitability by negotiating bulk deal with top suppliers

Project Details


2012 (Dec)


Abhishek Agarwal, Aashish Sharma, Rajesh Gande, Sumit Pokhriyal





The competitive retail landscape demands stores to maximize return from all possible avenues. This urge is further exacerbated by customer price-sensitivity and low customer loyalty. ABC retail too struggles with this problem and is exploring ways to improve its bottom-line. We, as a consultant, have come up with a proposal that would help ABC reduce cost without significant impact on revenue, thus improving the store’s profitability. As part of this proposal ABC is required to consolidate suppliers and enter long term contract with major players in order to exploit better deal.

This report focuses on the application of various forecasting techniques that would enable ABC design discount schemes for contract with the top 3 suppliers in return of higher revenue from ABC. ABC believes that this could be a win-win approach for both the parties and could result in significant revenue for ABC in future.

We identified ‘Facewash’ category to pilot this project and then depending on the learning and other business constraints, ABC would extend this to other categories in future. Currently, Facewash category has 16 suppliers out of which top 3 contribute to approx. 58% of the revenue. Our proposal aims to design a contract that promises a 20% increased revenue for these 3 suppliers in return for a 10% discount in the Facewash category.

The aim of this report is to define a parsimonious model to determine the weekly demand for the Facewash category – both at the overall level and for the top 3 suppliers at ABC. Using various forecasting techniques, we have tried to forecast and model the category sales on an aggregate level and for the top 3 suppliers.

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