Background and Challenge
A national automotive aftermarket retail and service center that is focused on “light” auto services, such as tire changes, wheel alignment, oil changes and battery changes engaged L.E.K. The company was suffering from price competition by online tire retailers, and had tried a range of different pricing, promotion and other strategies over the prior years, without being able to stem declines in performance. Our core objective was to develop a turnaround strategy and an implementation playbook to return the company to historical profitability levels.
Approach and Recommendations
We performed detailed analysis of the company’s sales data, including analysis of customer baskets, SKU profitability and relative performance across store locations, combined with research into its competitive position which highlighted many issues with how the company went to market. The company was at a disadvantage compared to competitors because of its lack of regional store density, relatively poor customer experience and very few compelling reasons for customers to choose their store over competitors. In addition, the lack of a coherent pricing strategy left the merchant teams unsure what to optimize. Despite the importance of service to consumers, the company’s digital presence was optimized for online commerce, not driving traffic to the store.
Our recommendations sought to leverage the company’s existing assets, including its strong locations, well known-brand and access to unique marketing vehicles, while fixing the barriers to growth. We created a business case for the development and deployment of new technology to create a differentiated and faster customer experience and maximize the lifetime value of a customer. Furthermore, we recommended and developed an execution plan for a prioritized range of initiatives to support the turnaround, including:
- Driving traffic by enhancing the marketing mix and message to communicate value to customers
- Refining the pricing approach with regional flexibility
- Re-engineering the product assortment to simplify the different value tiers and increase the mix of higher-margin exclusive and private-label brands
- Re-tooled the ecommerce strategy to communicate a consistent message and drive both online sales and traffic to the stores
Results
We developed a comprehensive playbook for the company to address a set of core strategic initiatives and restore profitability which allowed them to take the actions to stem and reverse the business’ decline.
12142021171200