Challenge
A major Australian retail chain was entering a critical period of transformation. After years of solid growth through both acquisitions and organic expansion, the company had pursued a major European acquisition. However, the venture quickly became a challenge, resulting in mounting losses and the eventual sale of the entity at a significant loss.
Following this setback, the retailer turned its focus back to its core markets and recognized the need to generate rapid cost savings to stabilize performance. One key area of focus was Goods Not for Resale (GNFR), a significant cost base spanning categories such as supply chain, facilities, marketing, energy and utilities, IT and telecomm, and corporate services. The client wanted to perform a savings diagnostic across its GNFR portfolio and deliver an organization-wide procurement capability assessment.
Approach
A diagnostic program based on rigorous data analysis, market benchmarking, and stakeholder engagement was designed to provide a holistic view of savings potential and procurement capability.
The approach included:
- Spend analytics – Comprehensive review of ~$700m of indirect spend, segmented into key GNFR categories.
- Stakeholder and supplier engagement – Conducted structured interviews to gather insight into procurement practices, supplier performance, and internal requirements.
- Benchmarking to best practice – Compared procurement maturity and category performance against leading practices in the retail sector.
- Savings opportunity assessment – Delivered a clear “size of the prize” view, quantifying conservative and stretch savings potential.
Alongside the diagnostic, a procurement capability assessment was also conducted to evaluate organizational design, resourcing, and the tools in place to support procurement excellence.
Results
The diagnostic identified multiple opportunities to strengthen performance and deliver cost efficiencies, including:
- $34m in conservative savings opportunities (4.8%) and up to $60m of potential savings across influenceable categories.
- Procurement resourcing and organizational structure redesign, ensuring the team had the right capability and focus to deliver on identified opportunities.
- Procurement spend cube and analytics solution recommended and implemented, providing the business with enhanced visibility, reporting, and ongoing spend management.
The management board reviewed and endorsed these recommendations, and funding was approved for both the savings initiatives and the capability enhancements.
The engagement provided the client with both immediate and long-term benefits:
- A clear, prioritized roadmap for delivering multi-million-dollar GNFR savings.
- Strengthened procurement capability through structural and resourcing improvements.
- Enhanced visibility and control of spend via a proprietary analytics solution, which the client continues to use today.
By combining robust analytics with practical recommendations, the retailer was able to rapidly identify savings opportunities, unlock procurement excellence, and position itself for sustainable performance in its core markets.
This project was delivered by Proxima’s APAC team, under the former brand name, ArcBlue.
