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Business case

Quantification of purchasing synergies between the purchasing departments of two competing retailers (black box approach)

Context

Retailers are generating low operating margins and their capacity to purchase at the best price from their suppliers stands among their major competitiveness drivers. Accuracy was called in to determine what synergies could be developed from the potential merger of the purchasing departments of two competing retailers.

Key Takeaway

Our black-box projects paved the way for collaboration or mergers between several major purchasing departments of competing retailers.Our assessment of synergies was considered highly representative of the real economic synergies to be generated.Thanks to our input, the fashion house closed certain stores, converted others and set up operations in other European countries. Our added value was that beyond the initial due diligence, we were able to model various strategic options, giving our client the tools necessary to make an informed decision.

Accuracy Role

To respect both competition and commercial laws, retailers are not entitled to exchange their purchasing conditions directly. Moreover, rebate structures are highly complex and assessing purchasing synergies requires in-depth expertise and modelling skills. To tackle these sensitive issues, Accuracy organised fully confidential black-box modelling projects.

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