By: Mini Sindhu -- Research Analyst, Marketing services
05 March, 2018
Retailers are increasingly focusing on strategic procurement of fixtures as these account for the largest spend in the entire shop fitting process. Retailers in the U.S. predominantly procure the shop fitting fixtures from China, mainly due to its competitive labor costs and the existence of large number of suppliers with expertise in fixture manufacturing. However, increasing labor cost in China and the growing focus on lead time has made it necessary for the U.S. retailers to explore alternative sourcing destinations. The objective is to shift their procurement without any drop in the manufacturing efficiency, in addition to leveraging cost advantages provided by the alternative location. The Mexican market is increasingly being preferred as one of the alternative sourcing destinations for shop fitting fixtures, mainly due to its quicker turnaround time and the cost efficiency achieved through lower labor and logistics costs.
This article focuses on U.S. retailers’ shop fitting fixture procurement by comparing China and Mexico as sourcing destinations. The parameters used to analyze the sourcing destinations include labor cost, shop fitting cost index, supplier availability and lead time impact. This article emphasizes the sourcing benefits that can be obtained by the U.S. retailers by shifting shop fitting fixture procurement from China to Mexico.
Fixture procurement is the largest cost component in the shop fitting process, accounting for 41– 84% of the entire spend. Mexico is an emerging sourcing destination for shop fitting fixtures due to its proximity to the U.S., and offers the potential to improve the cost efficiency of the fixture procurement process.
CPO Talk: Join us on May 17, Maximizing Value Delivery Beyond Savings