Revenue growth for a retailer

2nd Round approaching a case Bain BCG Mck
New answer on May 06, 2020
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Alexandre asked on Feb 29, 2020

Hello,

I recently had an interview with a partner of a top-tier firm that asked for hypothesis-driven and creative solutions. I'd like to have your ideas on this.

The situation was that a fast-fashion retailer had smaller revenues and market share than their biggest competitor although they both had same price, same products and same distribution channels (physical shops).

How would you approach this?

I was asked to go straight to the point and suggest the most probable root causes of this problem. Since I felt I could not talk about price, product or distribution channels, I identified 1) Less efficient marketing compared to competitors 2) Different product mix.

Looking forward to reading your thoughts on this,

Alex

(edited)

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Udayan
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updated an answer on Mar 01, 2020
Top rated McKinsey Case & PEI coach/Multiple real offers/McKinsey EM in New York /6 years McKinsey recruiting experience

In this scenario, there are 2 companies that sell same products at the same avg price using the same distribution channels, however one has a higher market share than the other. Below is one way to structure this issue - which is to look at the consumer journey

1. Awareness

  • Is one brand more well established because they are older, or because of marketing or because they offer unique experiences in store etc.
  • Do they have better brand knowledge than the other brand because of a recent news event
  • Are they popular with certain celebrities
  • Do they offer exciting perks - e.g., store cards with additional discounts, hosting events in their stores, being sustainably sourced if that appeals to their base...

2. Experience in store

  • How good is the in-store experience of the brands? This includes staff and how helpful they are, store layout, cleanliness, ease of navigation, interior use, availability of trial rooms, checkout times etc.
  • Is there sufficient nudging towards purchase - e.g., in-store promotions, curated lines, remembering your purchase history to give you recommendations
  • Does the in-store experience match the brand perception?

3. Post purchase

  • Is it easy to do returns? For example can you drop off in any store or ship it in? Can you return without a bill but just using your phone number or store card?
  • Does customer service handle post-sale issues effectively
  • Are you communicating with the consumer post sale? (updating them of relevant new products that compliment their purchase?)

The above consumer cycle approach can help understand what it is that helps one brand stand out over another when both compete in similar ways

(edited)

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Anonymous replied on May 06, 2020

Just to add on - I think one interesting question to ask before jumping into the details would be "if the small retailer sales the same products at same prices via the same distribution channels (not clear to me does it means exactly same store coverage as well?) as their biggest competitor, why are they in this business? What do they think they can differentiate?" There needs to be someting different, and one option would be to test whether they can leverage that differentiation.

Best,

Emily

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