NBG warns merchants to combat “margin erosion”

NBG warns merchants to combat “margin erosion”

According to the National Buying Group, merchants are facing a growing threat to their profits from “inadequate back-office systems” that are unable to automatically track the increasingly rapid movement in Supplier prices.

The concerns have been raised as NBG reports that its own state-of-the-art PIM (Product Information Management) software is being updated thousands of times every working day. These rapid price changes are, according to NBG, leaving some merchants “at best slow to react to price reductions that could help them remain competitive or, at worst, unable to react to price increases that will ultimately erode profit margins.”

Figures from NBG’s PIM software demonstrate that all categories of product have been affected from timber through to plastics, with an average of over 200,000 changes being made to prices and product details every month. This trend saw a peak of 352,000 updates as recently as January.

Mark Hughes, Managing Director at NBG, says that price volatility is here to stay: “Although the pace of price changes has settled down in recent months, there is no doubt we now live in an era of exceptional price volatility as supply chains come under pressure.

“We now have nearly three years of price data in the PIM which enables us to track the volume of price changes across our categories. Previously Suppliers would increase prices once a year, but it has been common for us to see those prices move every two to three months more recently.”

Mark says that outdated back-office systems are leaving too many merchants exposed. He continued: “Any merchant still manipulating a Supplier spreadsheet or manually inputting price changes will inevitably be unable to react quickly enough to changes. Robust data is the key to profitability. Without it, quoting and tendering to supply product without knowing how much the Supplier will charge is little more than a finger-in-the-wind.”

NBG’s PIM software – which the buying group believe is the most technically advanced product management software available to independent merchants – has been enhanced in support of the buying group’s commitment to enhancing the business performance of its Partners and Suppliers. The PIM currently has 93% of Suppliers providing data, a 10% increase in the last year, and 92% completeness of Supplier pricing data.

The value offered by the PIM also expands into other essential product data such as materials, dimensions, weights, USPs and images, referred to as Logistics, Marketing and Media data.

“It is often a real challenge for merchants to stay on top of frequent price changes from Suppliers and ensure those changes are inputted into their IT system in a timely manner,” concludes Mark. “Our message is that robust IT systems, like the PIM, can offer a competitive advantage both in terms of accurate pricing, along with a clear time-saving benefit.”

For more information on National Buying Group, including how to join the group, visit NationalBuyingGroup.com.

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