Article from Northcroft Hong Kong office
Richemont is one of the largest global prestige brands and owns some of the world’s leading luxury goods Maisons. For over 20 years, Northcroft has provided Richemont with procurement services to different Maisons on a variety of projects. However, luxury watches store fit-outs and upgrade projects, which are relatively small in scale, were performed in-house at a Maison level.
When Richemont’s senior management examined their watches store procurement processes, they realised they were missing a great opportunity to take advantage of their considerable economies of scale. In particular, using in-house procurement was:
- Creating wide variations in store fit-out costs across Maisons
- Spreading their purchasing power across too many vendors
- Producing redundancies in project and vendor management
- Leading to long lead-times in the design and production of millwork
Complex technical and material specifications requires expertise
While the Maison in-house procurement teams were excellent at performing their key roles, they didn’t have the expertise to manage complex tendering procedures for a number of Maisons with a variety of store requirements and locations in different countries of APEC. After interviewing 2 well-known quantity surveying agencies, Richemont chose Northcroft to assist based on their expertise in working with luxury brands and their long-standing relationship.
Northcroft was tasked with:
- Assessing Richemont’s current capital expenditure to find areas for improvement
- Standardising store fit-out costs by Maison so they could be costed on a per m2 basis
- Streamlining Richemont’s supplier pool to maximise economies of scale and enhance quality control
- Reducing procurement lead times by simplifying the tendering and procurement process
- Simplifying procurement processes to generate cost savings – particularly in the areas of project management and design
- Obtaining maintenance support from suppliers for 12 months after completion of each store fit-out or upgrade
The supplier selection process
Richemont was looking for suppliers who had experience in supplying millworks across the South-East Asia region. With input from each Maison, 16 contractors were asked to tender using the boutique drawings and specifications from each Maison’s latest store design. This formed part of the Master Bill.
During the pre-qualification assessment process, each potential supplier was evaluated on the basis of their experience, capabilities, equipment, production capacity, sustainability credentials etc.
Finally, 2 contractors were selected to be the preferred suppliers for all Richemont Maisons for the next 3 years. It is estimated the new and streamlined procurement process will provide significant savings over the first 14 months of implementation.
Expertise, a fresh perspective and long-standing relationships
Northcroft Hong Kong has an enviable reputation for building long-standing and collaborative relationships with clients. We provide completely independent advice and a fresh perspective to enhance client outcomes. Our relationship with Richemont displays the trust they have in our skills and our ability to help them find new ways to improve efficiency and quality while reducing costs.
If you are looking for quantity surveyors with local knowledge, international experience and the ability to provide a fresh perspective, get in touch with Northcroft.