Retail Sourcing Strategies: Are They Cost-effective?

The empirical study reported examines the nature of operational strategies in retail communities. Types of operational strategy are identified and described and their role and possible contribution to sustainable competitive advantage discussed. Thereafter, one specific supply-side strategy, strategic sourcing and procurement, is analysed in some depth. Here, geographic sourcing regions are compared and contrasted using the cost/benefits involved. In particular, we examine and challenge the widely accepted practice of sourcing low-cost goods from low-wage, foreign vendors. The work asks if this is, or should be, such a prominent objective in many sourcing strategies. Indeed, if there are other valid aims, can the advantages and disadvantages of each be properly assessed and quantified; and do organisations possess the relevant information to make these decisions? The research findings are based upon a survey of 78 UK and North American retailers in consumer good sectors. In addition, three of these retailers contributed to a more detailed case study. Finally, evidence is provided suggesting that often the sourcing strategies used are sub-optimal and fail to take into account many important variables.