Transfer pricing trends in the retail and consumer sector

A high-profile masterclass run by PricewaterhouseCoopers (PwC) has provided an invaluable update on Transfer pricing trends in the retail and consumer sector.

"Procurement can make a significant contribution to the bottom line - cutting purchase costs by as little as 5% can result in a 50% increase in profit margin."

Despite Icelandic volcanic eruption disruptions, a PwC masterclass, led by Sue Rissbrook (Global head of the retail and consumer transfer pricing  network), on transfer pricing issues for the retail and consumer sector attracted people from a wide and varied group of international businesses, including Diageo, Burberry, Cadbury’s and Unilever.  There were presentations on procurement, documentation, and resolving disputes, as well as a detailed working session on the challenge of establishing robust comparables.  Here are some of the highlights.

Possibilities in procurement

A number of major organisations have been looking again at this whole area over the last few months. In some cases it’s the result of expansion into new markets, in some it’s been prompted by the continuing recession and the need to keep costs down, and in others there’s been a one-off window of opportunity after a big merger or acquisition. There are also a number of trends affecting retail and consumer businesses in particular, ranging from the increased risk of supplier failure during a recession, to changes in consumer behaviour (some of which are also being driven by the downturn), to sustainability, and the increasing emergence of global supply chains. These developments are leading many international companies to restructure their procurement and supply relationships, whether by pursuing low-cost country sourcing opportunities (with all their attendant political and currency risks), or building green considerations into their procurement at an earlier stage.

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