The retail industry is underdoing tremendous change. Increasing ecommerce penetration and the continued strengthening of Amazon, proliferation of brand direct-to-consumer (DTC) strategies and new business models, demographic shifts and renewed spending priorities, highly informed and empowered consumers, rapidly evolving technologies, and massive restructuring of major legacy channel segments, to name a few, are creating major disruption.
Achieving top- and bottom-line growth is thus a challenge for many, and for some, long-term viability is in question. Today is a time when retailers need to objectively evaluate their roles and value propositions, and prioritize the right strategies ― both refinements and bold moves ― required to win in the future.
L.E.K. combines deep industry expertise, fact-based insights and sophisticated analytics to identify solutions to complex issues and build confidence among management teams to take informed strategic action. Retailers partner with us to deliver strategies that drive growth, create competitive advantage, unlock profit and value-creation opportunities, and mitigate risk. Our approach is highly objective and fact-based, but we also take extraordinary care to involve management teams throughout the process, as appropriate, to ensure full alignment.
How We Help
Regional, national and global retailers routinely engage us to:
- Accelerate growth: Our core focus is growth strategy, with a track record of guiding retailers to prioritize the right growth vectors and align on how to activate the strategies necessary to realize tangible results. We can address this challenge by applying different lenses: for example, evaluating opportunities based on Edge Strategy® and Strategic Market Position principles, and grounding strategic options in deep consumer understanding ― both psychographic and behavioral ― and brand position to clearly define “permission” areas of highest strategic value, rigorous market evolution framing, and business case and scenario analysis.
- Activate strategies: We work with our clients to put their growth strategies into action. We have a proven track record across many areas, including:
- Consumer engagement:
- Marketing strategy
- Pricing strategy
- Promotional strategy
- Store portfolio optimization
- Digital strategy
- Omni-channel strategy
- Store experience:
- Customer experience
- New concept development
- Merchandising strategy
- New services
- Consumer engagement:
- Operational effectiveness: We work closely with our clients to optimize processes (efficiency and effectiveness), capabilities and best practices, and organizational structures throughout their business. Our work has directly helped clients position their organizations against core value drivers to deliver on strategic priorities and generate top- and bottom-line financial improvement.
- New concept development: A specialty retail chain facing steep comp sales declines was on the brink of a major restructuring. L.E.K. assisted the client in developing a new store concept that was a radical, but strategically sound, shift from the legacy strategy, delivering a superior value proposition to the consumer. This included the evolution of the brand position, name, store format, real estate location strategy, store conversion, rebranding plan and digital strategy. This resulted in double-digit sales growth of the new store concept and a rollout across the chain nationally.
- Holistic growth strategy: A national specialty footwear retailer was facing persistent comp sales declines, and its portfolio contained a material number of low- or negative-profit stores. L.E.K. conducted a top-to-bottom assessment of the business, developing a holistic consumer-led growth strategy, spanning consumer segment prioritization, brand repositioning and marketing, merchandise assortment enhancement, store concept refinement, and real estate/location strategy. The new strategy helped comps turn from negative to double-digit growth since repositioning.
- New products and services: A national big box retailer was seeking to profitably grow the services segment of its business, aiming to drive new customer acquisition and retention, increase current customer spend, and build cross-shopping across retail and services. L.E.K. assisted the client in exploring both in-store and at-home services and developing new business offerings. The resulting suite of services became the jewel in the crown, generating hundreds of millions of dollars of high-margin revenue.
- Cost reduction: A global quick-service restaurant chain faced a 500 basis point shortfall in operating margins relative to industry peers. Through rigorous internal assessment, L.E.K.’s deep industry expertise, and strategic benchmarking, we identified cost reduction and performance improvement opportunities, supported by organization and process reconfiguration to enable the changes and make them “stick.” As a result, $150 million in savings were identified and achieved.
- Promotional strategy: A national specialty retailer of women’s fashion apparel was highly promotional and wanted a clear rule book for optimizing its promotional strategy. Our approach, grounded in deep data analytics, was built around understanding the different inherent elasticities of each time period in which promotions were being considered (e.g., day, week, season) and constructing the appropriate promotional recipe, given those dynamics. We developed a customized playbook to drive promotional decision-making, with clear rules and tactics for achieving key goals ― driving traffic, conversion and basket, as well as sales comp and profit generation.
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