Summary
Our high growth retail client, RetailCo*, experienced a significant share price decline after missing earnings expectations. We identified the company’s core strengths and performance improvement options. The resulting broad-based performance improvement program created $2.5 billion in shareholder value.
* Per the client’s request, any identifying information has been excluded.
At A Glance
Shareholder Value Created
Annual Cost Savings
The Situation
P&C Global Helps Its Client Take a Step Back to Realign Product & Pricing With Customer Strategy
Our retail client had enjoyed high growth and was planning to double its store count within 2-3 years, as well as increase diversification into new channels, products, and geographies. Unfortunately, they had failed to meet earnings expectations for the first time, causing a significant share price decline. Investors blamed a variety of factors including concept saturation and over-diversification.
Our Approach
P&C Global Worked With the Client to Address the Following Questions
- How do we identify, prioritize, and resolve execution limitations that are blocking our ability to rapidly grow?
- How can complexity be reduced to lower costs and grow the top line?
- What changes should we make to our product and pricing strategies to align with our customer strategy?
Our Recommendations
P&C Global Identified the Client’s Core Strengths Before Articulating Its Performance Improvement Options
The Results
P&C Global Launched a Broad Performance Improvement Program for this Retail Client
Marketing/ Product Development
- Consolidated and refocused marketing spend
- Targeted programs
- Segment to grow share of wallet and number of customers
- Reprioritized R&D pipeline
Organization and Staffing
- Restructured field front line management
- Created performance management and incentive system
- Optimized store level staffing by store type
Key driver of company store sales out-performance (~10% higher than retail industry average over multi-year horizon)
Sourcing
- Centralized procurement function
- Consolidated vendors
- Re-negotiated contracts
- Developed strategic supplier relationships
Drove $30M+ of annual savings after year one
Product Line Profitability
- Assessed true profitability of all store level SKUs
- Eliminated or re-priced 1000+ problem SKUs
- Rationalized R&D Spending
Drove $11M of annual savings
Labour
- Implemented store best practices
- Enhanced store labor productivity by eliminating admin work
- Increased store level automation
Saved $40M in annual labor staffing costs
Real Estate
- Redefined store “full potential”
- Assessed store portfolio and optimal real estate economics
- Improved efficiency in leasing, construction and repair and maintenance
20% annual R&M savings and a 5% increase in new store ROI
