Managing Retail Contracts Digitally
Apart from the competitiveness of the retail sector, managing the day-to-day operations and handling the deals with all the stakeholders is challenging. Contracting with different stakeholders is one of the aspects.
Handling all the contract requirements manually is unsustainable and unscalable, considering the expanding scope in the retail sector. So, to survive in the industry, businesses have to transform into digital contract management software.
What is a retail contract? Retail contracting in 2023
A retail contract is an umbrella term that includes all the contracts required for managing the retail business efficiently.
In 2023, when every customer is looking for a highly personalized experience, retailers cannot manage it with multiple suppliers and other management duties. With clean and clear contract data with the suppliers, the retailers can create a more personalized experience for individual customers.
Besides, opting for optimized contracting procedures can also help retailers reverse engineer the important data and ensure that the problems are solved in a timely manner.
According to World Commerce and Contracting, an efficient contract management process can increase a company’s revenue by 9%. Also, you can expect a cost saving of 25-30% with an efficient contract management system.
The rising challenges of the retail sector and high customer expectations in 2023 require more attention from retailers on contract management.
Critical challenges of contracting in the retail sector
Like any other economic sector, retail contracting has some specific challenges. These include:
Finding the best suppliers for a product – It requires additional effort to analyze a new supplier’s offering, rates, and deliverables, get into the contract, and then execute it.
Retaining employees – Another challenge in the industry is employee retention; enforcing contracts and ensuring employees complete their responsibilities within the agreed time.
Providing a multi-channel buying experience – Requires including more parties in a contracting relationship. The delivery companies or the extra resources hired will have to be managed.
Temporary hiring for seasonal demand – Finding, contracting, and then enforcing employees for a temporary or seasonal period is a hassle.
Types of contracts in the retail sector
Below are the primary types of contracts in the retail sector:
Sales Agreement – A retail sales contract between the retailer and supplier, highlighting what will be bought, at what price, and the other terms and conditions.
Order Forms – It is a variation of the sales agreement. Usually, a standardized form is provided to the buyers where they put in the requirements (quantity, items, etc.). Once accepted by the seller, it becomes a contract.
Master Service Agreements – For the long-term relationship with the supplier, Master Service Agreement is signed. Such agreements contain conditions covering a longer span, so the entire contract doesn’t have to be renegotiated every time.
Terms of Service – This is a contract you find on the retailer’s website, providing details of how the interaction between the customer and retailer will take place.
Renewals and Upsell Agreements – Suppliers might want to sign such contracts with the retailers where the terms for upselling or renewals are discussed.
Ways of managing contracts in the retail sector
In the retail sector, you can either keep the contract management manual or make it automatic. In the case of manual management, all the contract processes, from negotiation to execution and auditing, will have to be done manually. But as multiple active contracts and parties are involved, it will be best to use automated software specially designed to help in contract management.
Benefits of Managing Retail Contracts Digitally
When you already have a lot of activities on your hands, managing retail contracts digitally can surely make your life easier. Here are the primary benefits you should expect from this digital transformation in your retail business:
1. Better Management of Varied Retail Contract Types
As a retailer, you have multiple stakeholders. Even within the broad categories like suppliers, distributors, and employees, the nature of the contract with each party varies. So, by keeping a retail contract template, you can save time and effort with different parties.
2. Monitor the Contracts Throughout Their Life Span
Getting into the contract isn’t the only important thing. You must abide by the terms and comply with the agreed-upon deadlines. Manual tracking solutions to monitor a contract’s progress through its life span become difficult. You need digital software that can track multiple contracts simultaneously, irrespective of the stage of different contracts.
3. Negotiate Effortlessly
Another benefit of managing retail contracts digitally is that you can negotiate with different parties effortlessly. You know exactly how a particular party performed in a contract previously and whether it would be wise to revise a contract.
Also, all the essential details about different contracting parties can be available in a single repository, making it easier for you to make decisions.
4. Reduced Contract Turnaround Time
The contract turnaround time can also be reduced when you have all the contracts digitally. The changes in terms and approval, which previously required documents to be mailed from one party to the other, can now be accessed by all the parties with significant ease, thus reducing the turnaround time.
5. Stakeholders Can Gather Valuable Insight
When everything is digital, all the stakeholders can get valuable insignia about the following milestones, delivery times, and the current compliance statistics. With all this data readily available, the chances of compliance are increased significantly. Irrespective of the contract’s phase, the relevant parties can get reminders and notifications to improve the process.
Use of contract management software in retail
The use of contract management software in the retail sector can automate multiple processes. Contracting with different parties will become easier with the existing templates and a proper process to follow.
Also, the presence of all documents can help the organization’s management analyze the need for new orders or upsells. Furthermore, automated contract management software can also ensure the use of lesser resources, higher productivity, and increased revenues.
Tips for choosing the right CLM for retail
Finding the right CLM for retail could be tricky, but here are a few tips to make the process simple:
Must have End-to-End Automation – Your retail software must provide automated features from pre-built templates, SOW and NDAs to a system of audit and monitoring in place.
Includes Searchability as a Feature – The retail software must offer it as a significant feature because finding a particular bit of information from hundreds of contracts wouldn’t be possible.
Contract Analytics are Available – Manual calculation of the contract risk, execution statistics, and other information will be tiring. So, the software must include analytics as a significant function
Organizational Size and Needs are Essential – Lastly, your choice of retail contract management software must depend on your organization’s size, sales process complexity, and departmental access.
Retail contract management is often overwhelming because of the number of active contracts. With a proper and automatic system in place, you can reduce the contract turnaround time, enhance productivity and reduce costs. We have mentioned the tips for choosing the right CLM for retail. By following them, you can find the best software for your business.