Case Study: Retail Supermarket Chain – utilising space much more profitably

The Challenge

A leading retail supermarket chain invited CameronConsultants to identify how to improve profit by £3 million per annum in a specific sector of its business. The company had existing data on product group profitability, but lacked insight into the deeper cost dynamics driving true performance — especially the role of fixed costs and their impact on net contribution.

Our Approach

We applied Cameron’s proprietary Cogent methodology, designed to uncover the cost generators behind apparent profit outcomes. This included calculating net contribution based on a scientific allocation of fixed costs actually generated by each product group or product line, rather than relying on standard assumed allocations (e.g. per pound of sales, or per square foot).

The analysis revealed significant variations in profitability within and between product groups — variations not visible through the company’s internal reporting systems. We also conducted an IndirectProduct Profitability (IPP) analysis to test whether loss-making lines might be justified on the grounds of traffic generation.

The Solution

The study uncovered that losses due to poor-performing lines within product groups exceeded £5.5 million per annum. Some product groups with large space allocations were in fact delivering very low or negative contributions. Contribution per square foot varied dramatically — from sectors exceeding £110 per sq. ft. to others performing worse than minus £80 per sq. ft.

IPP analysis showed that while some loss-making products did generate traffic, many contributed nothing in indirect benefit — challenging long-held internal assumptions.

A profit improvement plan was developed, focused on:

Rationalising low-contribution product lines
Reallocating shelf space to higher-yielding categories
Adjusting product group priorities to reflect true performance

The Outcome

The proposed changes were estimated to deliver over £4.7million per annum in profit improvement, with an additional £11 million per annum potential identified from potential reallocation of product group space. The company reported a year later that profit improvements had exceeded expectations.

Corporate Profit Improvement

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