Cost of losing the largest retailer
- Contribution lost GBP 12,480,000 · Recovered GBP 3,120,000 · Net -GBP 7,860,000 · Share of group profit 52%.
Executive Intelligence · Customers and Commercial Strategy
Customer Concentration and Retention Risk
Revenue concentration and retention indicators from verified customer and revenue data, drawn from a connected CRM or ledger.
Demonstration: Pinecrest Foods plc (fictional) · Food manufacturing. Fictional data and a scripted answer.
The situation
- Organisation
- Pinecrest Foods plc (fictional)
- Who is asking
- Chief commercial officer
- Industry
- Food manufacturing
- What happened
- Two retailers account for over half of sales, and one has asked for a price review that could end the relationship.
The question asked
How much of our profit would we lose if the largest retailer left, and how fast could we replace it?
What it reads, and who can see the result
- Sales and margin by customer exportRevenue and contribution margin per retailer.
- Pipeline registerOther opportunities and their timing.
- Reads
- Sales and margin by customer, aggregated, and the pipeline summary.
- Does not read
- Contract terms.
- Permission
- Commercial finance access.
- Who sees it
- The chief commercial officer and the CFO.
Try it
Change the assumptions. Every result and the answer below are recomputed from them, and a warning appears when a result crosses a stated limit.
- Revenue lost
- GBP 52,000,000The largest retailer buys 52,000,000 a year at a 24% contribution margin.
- Contribution lost
- GBP 12,480,000
- Contribution recovered in year one
- GBP 3,120,000
- Net profit effect in year one
- -GBP 7,860,000
- Share of group profit this represents
- 52%Group operating profit is 18,000,000.
A first-year loss of more than 3,000,000 would breach the profit range the board was told to expect.
The answer
Simulated answer. Written for this fictional case, not produced by a live model. Only the figures in it are computed, from what you decided above.
Losing 100% of the largest retailer costs GBP 12,480,000 of contribution; net effect in year one -GBP 7,860,000.
The retailer buys 52,000,000 a year at a 24% contribution margin [S1], so a full loss removes GBP 12,480,000. Replacing 25% of it from other customers in the first year recovers GBP 3,120,000 [S2], and overhead cuts of GBP 1,500,000 soften the rest.
The number to take into the price review is the share of group profit at stake: 52%. A negotiator who knows what walking away costs both sides negotiates differently from one who does not.
Relies on: S1 · Sales and contribution by customerS2 · New-business pipeline summary
No approval is needed for this result: it is read-only insight, and nothing consequential happens because of it.
What it produces
For the price review
- Know the walk-away cost before the meeting, and the cost to the retailer too.
Limits of this example
- Replacement speed is a judgement.
- Ignores knock-on effects on other retailers' terms.
- This is a scripted demonstration on fictional data. No model was called and no real organisation, person or result is shown.
More in Executive Intelligence
- Enterprise Health MonitorOne view of whether the organisation's governed functions are healthy, built only from verified source readings.
- Executive Priority EngineRanks what needs executive attention across modules by stated, inspectable rules (overdue, severity, deadline, owner).
- Cross-Functional IntelligenceShows how an item in one function relates to items in others, using only links that are recorded (a finding to its obligation, a handover to its training).
- Business Performance NarrativeA plain-language summary of verified readings for a period.
- Strategic Planning AdvisorA planning workspace for objectives, assumptions, initiatives, owners and review dates, as recorded by people.
- Market Expansion IntelligenceCompares candidate markets or jurisdictions using verified, dated external data and the organisation's own compliance footprint.
- Competitive IntelligenceRecords competitor facts that a person enters with a source and a date, plus approved public-source feeds.
- Growth Opportunity DiscoverySurfaces opportunities from the organisation's own verified data (for example repeat findings, unused capability, unserved locations) as hypotheses for a person to accep…
The Executive Intelligence story · This capability in the full register