Margin is deteriorating.

Gross margin has slipped and the business is not certain where. Input costs have moved, promotional depth has increased, freight and trade spend have grown, and the range has expanded faster than it has been rationalised.

Averages are hiding the answer.

• Margin is managed at a company average rather than at the level decisions are made.
• Trade spend and promotional investment are treated as marketing rather than as price.
• Cost increases are absorbed rather than passed through or re-engineered.
• The tail of the range is never assessed against the cost of carrying it.
• Price increases are delayed until they have to be large.

• What is real net margin by product, channel and customer?
• What has moved: input cost, freight, mix, promotional depth or price?
• Which products and customers destroy margin, and what would happen if they stopped?
• When was price last reviewed, and against what?
• What is the cost to serve by channel?

• Rebuild margin reporting to product, channel and customer level.
• Run a structured price, range and promotional review.
• Address cost of goods through specification, sourcing and volume consolidation.
• Rationalise the tail of the range where it does not earn its place.
• Put a margin governance rhythm in place so it does not drift again.