What is Indirect Spend in Retail?

Indirect spend in retail refers to all purchases that support store operations but are never sold to customers. This includes cleaning supplies, packaging, safety equipment, store fixtures, IT, and back-office items. In retail specifically, this category is known as GNFR — Goods Not For Resale — and it accounts for a significant share of total operational costs.

There is a part of every retail operation that keeps things moving without ever appearing on a product shelf. The till rolls. The cleaning products. The bags at the checkout. The safety signs in the stockroom. None of it gets sold. All of it gets used.

That is indirect spend. And for most retailers, it is far larger, far more fragmented, and far less managed than the buying teams who handle merchandise ever have time to address.

This article explains what indirect spend is, how it differs from direct spend, what it actually costs, and why so little of it is under proper control.

Indirect spend covers every purchase a retailer makes that supports operations rather than feeding the product range. Nothing in this category ends up in a shopper's basket. All of it is consumed by the business itself.

In practice, it includes:

• Packaging and carrier bags
• Cleaning chemicals and janitorial supplies
• Safety equipment and PPE
• Store fixtures, hangers, and display materials
• Till rolls, labels, and stationery
• IT consumables and back-office equipment
• Workwear and staff-related supplies

In retail, this category has a specific name: GNFR, or Goods Not For Resale. The two terms describe the same thing. If it keeps the store running but is never sold to a shopper, it is GNFR. For a more detailed breakdown of what GNFR covers and how it is defined across retail operations, see our What is GNFR? article.

Direct spend — sometimes called GFR, Goods For Resale — is straightforward. It is the merchandise. The product on the shelf, the item in the window, the SKU the customer pays for. It is what retail exists to sell.

Indirect spend is everything the business buys to make that selling possible.

The split between the two is worth understanding clearly. GFR typically represents around 80% of a retailer's total purchase spend, but draws from only around 20% of its suppliers. GNFR is the inverse. It accounts for roughly 20% of purchase spend, but involves around 80% of the supplier base.

That imbalance has consequences. A large number of suppliers, each managing a relatively small share of total spend, means a large amount of administrative overhead. Multiple order processes. Multiple invoices. Multiple delivery schedules. Multiple relationships to manage. All for categories that individually may not seem significant, but collectively add up fast.

More than most buying teams expect.

Across organisations broadly, indirect spend accounts for around 45% of total spending, according to Zycus. In retail specifically, GNFR can represent 20 to 30% of a retailer's total operational expenses, or roughly 6 to 8% of revenue, according to SIG.

For a retailer operating across 50 or 100 or 500 stores, that is not a rounding error. It is a material cost line. And in most organisations, it does not receive the same level of rigour as merchandise procurement.

The buying team scrutinises margin on every product. GNFR, by contrast, is often handled by operations or finance as a general overhead, with no category ownership, no standardised assortment, and no consolidated view of what is being spent where.

Because nobody owns it end-to-end. That is the short answer.

Longer version: GNFR sits at the intersection of multiple departments. Procurement, operations, store management, finance. Each has a partial view. None has the full picture. So spend accumulates across dozens of suppliers, categories get managed store-by-store rather than centrally, and visibility at HQ level is almost non-existent.

The data reflects this. According to Varisource, over 80% of procurement leaders admit they lack proper visibility into indirect spend. That is not a niche problem. That is the default operating state for most retail businesses.

The cost of this invisibility shows up in places beyond the obvious. Each individual GNFR transaction can cost up to £50 in internal time and resource to process, separate from the value of the goods themselves, according to Acopia. Multiplied across hundreds of stores placing multiple orders per week, that administrative overhead becomes substantial.

Low individual transaction value, high supplier fragmentation, diffuse internal ownership. Each factor on its own is manageable. Together, they ensure that indirect spend stays unmanaged.

Significant. And consistently underestimated.

Structured spend analysis of indirect categories regularly uncovers 5 to 15% in savings opportunities, according to Varisource. For procurement teams that achieve proper visibility and consolidation, Zycus cites potential savings of 20 to 40%.

The size of the blind spot is proportional to the size of the opportunity. Categories that have never been properly reviewed, suppliers that have never been benchmarked, assortments that have grown organically without any rationalisation — all of these represent cost that has simply never been interrogated.

This is not about squeezing suppliers. It is about understanding what is being spent, standardising what is being bought, and reducing the number of suppliers needed to supply it.

Three things tend to make the most difference.

Visibility. Before anything else, the business needs a consolidated view of what is being spent, across which categories, with how many suppliers, across which stores. Without that baseline, it is impossible to prioritise or act.

Consolidation. Managing 30 suppliers to cover GNFR means 30 order processes, 30 invoices, and 30 relationships to maintain. Reducing that number, whether through direct renegotiation or by moving to a single-partner model, cuts administrative overhead and creates leverage.

Ownership. Someone in the organisation needs to be accountable for GNFR as a category, not as a by-product of store operations. Without a named owner, the spend will continue to drift.

Some retailers address all three simultaneously by outsourcing GNFR to a single specialist partner. Worldpack operates this model for retail chains across Europe, consolidating their entire GNFR assortment into one supplier relationship, one ordering system, and one delivery flow. It is not the only approach, but for retail operations managing significant store networks, it removes the structural cause of most indirect spend problems.

What is the difference between indirect spend and GNFR in retail?

The two terms describe the same category of purchasing. Indirect spend is the general procurement term for all purchases that support business operations rather than producing goods for sale. In retail specifically, this is called GNFR — Goods Not For Resale. Both refer to products like packaging, cleaning supplies, safety equipment, and store fixtures that are consumed by the business rather than sold to customers.

How much of a retailer's total costs does indirect spend represent?

According to SIG, GNFR typically accounts for 20 to 30% of a retailer's total operational expenses, or roughly 6 to 8% of revenue. Zycus estimates that across organisations broadly, indirect spend represents around 45% of total organisational spending. The exact figure varies by retail format, number of locations, and how tightly merchandise margins are managed.

Why do most retailers struggle to manage indirect spend effectively?

Three structural factors compound each other: diffuse internal ownership, high supplier fragmentation, and low per-transaction value that makes individual purchases seem too small to warrant scrutiny. According to Varisource, more than 80% of procurement leaders admit they lack proper visibility into indirect spend. Without a consolidated view and a named owner, the category defaults to being managed reactively.

What savings are realistic from improving indirect spend management?

Varisource reports that structured spend analysis of indirect categories routinely uncovers 5 to 15% in savings opportunities. According to Zycus, top-performing procurement teams that achieve proper visibility and consolidation can realise savings of 20 to 40%. The scale of the opportunity is directly related to how unmanaged the category currently is.

What is the administrative cost of unmanaged indirect spend?

Beyond the spend itself, each individual GNFR transaction can cost up to £50 in internal time and resource to process, according to Acopia. Across a large store network placing frequent orders with multiple suppliers, that processing overhead becomes a significant and largely invisible cost.

What is the first step a retailer should take to get indirect spend under control?

Visibility comes first. Before any consolidation or renegotiation is possible, the business needs a clear picture of total indirect spend: which categories, which suppliers, which stores, and what volumes. Most cost reduction and process improvement follows from that baseline. Without it, decisions about where to consolidate or standardise are based on assumptions rather than data.