London: Multi-channel challenges and the threat of hard discounters have driven up the use of management consultants in UK retail, according to new research from Source Information Services (Source). The retail sector's increasing use of consultants was one of the fastest in 2014 — up 9.7 per cent to £253million.
The Source report highlights that the global challenges of grappling with multi-channel and online competitors are compounded in the UK by the competitive threat posed by the hard discounters. The likes of Morrisons (which recently saw its profits halve) are finding their position in the market under increasing pressure, as the aggressive strategies of stores like Aldi and Lidl take market share — resulting in established grocers turning to management consultants to try and claw back some of the lost ground.
Edward Haigh, Director of Source Information Services said: "Retail clients are particularly focused on business strategy as a result of the increased threat of hard discounters, which has made cutting costs, and the need to make the most of new technology a big priority. This is making them more inclined to use consultants to achieve these goals."
The Source report also explains that the expected government regulation as a result of reported behaviour to small suppliers by Tesco, B&Q and LIDL is also likely to drive up the use of management consultants.
James Brown, Partner of Simon-Kucher & Partners added: "I think there will be a lot of interest in the 'post-Tesco' retail environment following the trouble they've had. There's certainly a reshaping of the British grocery market going on. Retailers and their suppliers are looking at new ways of doing business, and they will be looking to consultancies to support them."
Edward Haigh from Source concluded: "The only problem that consulting firms operating in the retail sector will find is that some clients are only making wafer-thin margins, so price is an on-going issue. This isn't helped by the intense competition between firms bidding to win large programmes."