Consumer products, luxury and retail >> Case Study
CASE STUDY | Consumer products, luxury and retail
Achieving excellence in store profitability
Our client, an Italian retail multinational, specialist in healthcare services, had laid out a new and ambitious strategic plan. To achieve their strategic targets, they needed to reach operative and commercial excellence within 12 months. The client was aware that this was a demanding task: among other things, the group lacked a suitable performance measurement tool (it was available, in some cases, at subsidiary level).
They called on us to help them pursue their EBITDA improvement, starting at shop level, to define a common set of Key Performance Indicators and a systematic reporting process for the group. We also all saw this as the right moment to fine tune the budget process, moving from a top-down to a bottom-up logic.
The team started off by identifying a limited set of operative KPIs common to all countries, in order to monitor performance and support decision-making. We then made the first necessary step to create an internal Community, by organising the first workshop with the commercial heads of five European countries. Our attention was then focused on one country, where we analysed the performance of the points of sale in detail.
This engagement resulted in a detailed action plan for an EBITDA improvement of two percentage points within two years in the selected country, with the definition of the KPIs serving as a preliminary basis for the group’s performance monitoring systems; an internal Community that has the clear objective of exploiting internal and external knowledge and best practices; and an operative test to develop the budget bottom-up from shop level, coupled with a detailed, prioritised action plan.
Defining the opportunities of the Secondary Market
Our client, a global leader in the luxury eyewear market, wanted to identify a way to sell obsolete and out of production styles, which have increased considerably in the last few years due to shrinking market sales and an increase in product variety – to the point that they stood at more than 10% of product in stock. Traditionally, these items were destroyed, at high cost, thereby missing the opportunity to serve the worldwide growing market of both outlets and corners inside second-tier department stores.
The team carried out a detailed mapping of items in stock, evaluating the opportunities by category. An international benchmark on success cases was also conducted. This was followed by a definition of the perimeter of the Second Market by channel and the discount policy vis a vis the items on regular sale.
We identified key wholesale clients to serve, in particular in the emerging markets, with different product ranges and with specific pricing and selling propositions. We also defined the policy for the retail outlets, targeting in particular European countries where out of town locations do not run the risk of overlapping with traditional downtown stores, which typically target wealthier customers.
The plan revealed huge potential, not only due to the opportunity to sell a large part of the current stock and save the money spent in the product destruction, but also because of the coverage potential of the new channels, achievable using both the client’s own brands and through a careful management of licensed ones.
Revising the supply chain of a luxury brand
Our client, a well-known premium shoe brand, leader in its segment and owned by one of the world’s most important fashion groups, was concerned by its declining revenues. The situation seemed to be due in part to the market crisis, and in part to the recent change of ownership. However, the main critical issues laid in the supply chain area (process complexity, high production costs, unsaturated plants, late deliveries to customers, and so on).
In addition to a detailed analysis of the economics, the team focused on operational issues:
• Analysis of the industrial process, from collection briefing to delivery
• Benchmarking and identification of gaps vs. competitors and/or best practices
• Supply chain performance analysis (complexity ratios, efficiency level, timing, factory saturation, make vs buy results, direct vs. indirect costs, delivery KPIs)
• Evaluation of risks and investments linked to industrial restructuring
With top and industrial management, we came up with a thorough plan on the entire flow: collection development – selling – production – delivery. Some of the key impacts were:
• Simplification and lower costs in collection development (complexity reduction of around 30%)
• Internal factory process and layout review (30% saturation increase); review of make or buy strategy.
• Review of delivery priorities and process (service level improvement target by 3-4 weeks)
• Creation of a monitoring tool for production activities; creation of a new quality control system.
This engagement represented a unique opportunity to help a luxury goods manufacturer in the operations area - which is crucial for performance, but typically less of priority for luxury goods top management, who mainly focus on style and brand. Furthermore, it was a wonderful experience for the team, who had the chance to work next to highly skilled craftsmen.
Benchmarking manufacturing costs across plants to launch a continuous improvement process
Our client, a global leader in confectionary and bakery products, was concerned by the gaping differences in manufacturing performance (waste, efficiency….) among plants producing the same items. They were also aware that they lacked the tools to measure performance over time, to evaluate improvement initiatives and to collect ideas or best practices. We were therefore called in to help develop an internal benchmarking process; to spread out best practices; and to define improvement targets, sharing them among plant managers. Lastly, we had to plan the implementation of our recommendations.
The project involved around ten European plants. Our team began by working with the plant executives to create a repository detailing the KPIs of production (cost, time, quality), with the aim of discovering major gaps and differences. At the same time, we launched an initiative to identify and document best practices and to promote idea generation. All the results were discussed and shared among plants. We then produced a general improvement plan, and the plant executives launched specific programmes at plant level on the identified gaps.
The impacts of this project were significant and wide reaching: savings of over € 15 million per year; the development of a work methodology for analysing data and defining improvements; the creation of a best practices repository and a new process to maintain and nurture continuous improvement. Furthermore, the team loved this project, not least because they spent many days on the plant premises – sometimes even tasting delicious products fresh from the line!
-
YueGuangZu, il fronte dello shopping
A recent study by Value Partners on retail opportunities in China. By Enrico Lanzavecchia, director, and Xu Huang, senior manager of Value Partners.
» -
La Beste si sdoppia in Cina per crescere sul mercato Usa
The recent partnership between the Italian textile group Beste and the Chinese Huamao Textile, to better serve the Asia and Usa markets. With a contribution by Enrico Lanzavecchia, director at Value Partners.
»
