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Company case by Bain & Company

Bain Case: BeautyCo – Where Did the Profits Go?

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Case Prompt

Our client BeautyCo is a large European perfumery company with 500 shops across Europe. However, BeautyCo has been struggling with a decrease in profitability for some time and would like to work with us to understand what the causes and possible actions could be. Therefore, as a first step the client wants us to identify the cause of the profitability issues.

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Short Solution

Question 1: What could be the drivers of declining profitability at BeautyCo?

Question 1.1: Where do the profitability problems of BeautyCo stem from?

Question 1.2: Which effect does the market environment have on BeautyCo's declining profits?

Question 1.3: Why are customers more likely to buy from Amazon & other online players than from BeautyCo?

Question 2: What is BeautyCo’s current Gross and Operating Profit Margin?

Question 2.1: How does Amazon sell at lower prices?

Question 3: How big is the grey market in Germany?

Question 4: What can BeautyCo do to increase its own competitiveness?

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