By Joel M. Albrizio, President

"How The R.F.P. Saved A&P Money And Created Insolvency"

It's a simple abbreviation, R.F.P. (Request For Price). How could something so simple, designed to cut costs, destroy the once dominant retail giants?

Let's first take a look at 2015 and the general mentality of cost cutting to meet the retailers budget. How many times have we all heard phrases like "this technology will save the company 15%-20% in direct labor costs?" Twenty years ago when a salesperson boasted of their latest accomplishment they might say "with this technology you can increase sales 15%-20%."

It's a subtle phrase change, but one that leads the retailer down the wrong path. A path way too many retailers like.

A&P slipped into what we call the "Death Spiral."

Here is how it happens. Just a few years ago, A&P had acceptable critical mass with its annual sales. A&P decides it can raise profits by cutting overall costs of operations just a few percent here and there.

In comes the R.F.P., or request for price. A&P or any retailer then has what amounts to a clerk, in many cases, manage the process of bidding all of its retail services & products with the goal of cutting costs and finding otherwise unavailable bottom line.

The problem with this process is while the retailer is focused on cutting costs, it's easy to overlook the depth of knowledge of the management team member handling the R.F.P. process possesses.

How qualified is this team member?

Do they have the ability to define the professional levels required to bring forward new ideas and technology necessary to grow?

Wait a second, Grow?

We never spoke about growth in the R.F.P. process. We spoke about cutting costs. What does growth have to do with all of this? Won't that just happen when we cut the cost of all of these categories? Quite simply, the answer is no.

To A&P, as with many retailers and wholesalers, the cost of products and services has taken precedent over the ability to grow and remain a sustainable retail enterprise.

Without sales growth concepts in conjunction with continued competition entering the market place, the retailer continues to flounder. So costs are cut, and over time, so are sales.

Now costs must be cut, and again, over time, so are sales. Once this process completes its first cycle and begins its second cycle the retailer is...

Officially in the "Death Spiral."

So now the bid requests go out. All of the required specifications are listed. It seems so simple. The retailer is now looking for the lowest price and expects retail success by achieving the goal. The goal is achieved. Wow, we did it again.

The team member bonuses based on the requirements of the bonus program, except the company has cheated itself from the very ideas and expertise necessary to survive or possibly thrive.

So simple, but how can this be?

The answer is simple. It takes time to assemble a solid group of professionals to keep the retailer growing and thriving. This will not be accomplished by 4:30 every day, so get ready for some long days. This will not be done by tracking your next vacation or get-a-way location - you might miss a few.

Sales growth and solid bottom lines result from the "Best And Brightest Mentality," and a team of professionals who are all in.

So when your retail organization begins to focus on the R.F.P., keep an eye on what it will really cost you and not what it may save you.

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