Extensive study finds global retail turning to consultants to cut costs – capitalise on technology - and improve productivity…

The global retail sector is expected to increase its use of management consultants faster than any other sector in 2015. Cutting costs, taking advantage of new technology, and improving productivity are driving demand as nearly three quarters of global retailers (68 per cent) expect to increase their use of consultants during the year ahead.

The extensive Source Information Services (Source) study  of over 2,600 senior users and buyers of consulting services in 14 major consulting markets also estimates that consulting spend in retail, valued at $9bn in 2013, will increase 12 per cent over the coming year .

The financial services and technology, media, and telecoms (TMT) sectors have the next strongest global consulting markets, being valued at $26bn and $11bn respectively. However, Source points out that with expected growth of seven per cent in 2015, the prospects in TMT are more positive than in financial services, which appears to be slowing with growth of six per cent expected.
 
Fiona Czerniawska from Source Information Services said:
“Retail is a hotbed of activity for consultants. In mature consumer markets, retailers face increasingly tough competition from discount chains, and at a time when they’re still trying to ensure reasonable margins in their online businesses. Outside of this, regulation is a rising concern. Perhaps the government’s strong voice on how grocery retail needs to change the way it treats its suppliers is starting to have a significant impact.

“However, we’re now in a more volatile environment where most retailers will spend more, but a significant minority – almost one in ten – will spend less, perhaps because they’ve already seen a couple of years of substantial investment.”

Key services - technology and operational improvement
2015 will be a good year for technology consulting firms as around three quarters (70 per cent) of clients expect their spending on this area to grow in 2015 – a third (33 per cent) of them by more than ten per cent. Source estimates that the global technology consulting market, currently worth £30bn, will grow by ten per cent in 2015.

Operational improvement consulting, worth $21bn globally, is also predicted to grow by ten per cent in the year ahead as few clients expect their investment in this area to decline. However, clients are pushing to tie consulting fees to performance as this is the one area of consulting that really lends itself to contingent fees. Retail and the TMT sector look set to be the strongest markets for this type of work, with manufacturing and the services sector not far behind.

Fiona Czerniawska from Source concluded:
“Delivering all of this within comparatively tight margins will be the hallmark of success this year. Keeping fee rates low will be important, but it won’t be anything like enough if consulting firms want to grow.”

For more information on Source reports contact alice.noyelle@sourceforconsulting.com or telephone +44 (0)20 3700 5462/visit www.sourceforconsulting.com.