Stopped cash burn and restored profitability
Case study:
Stopped cash burn and restored profitability
- Situation
- A store-centric multichannel retailer faced a flat market, aggressive promotions and pricing pressure, resulting in declining sales and market share losses. More than 20% of stores were loss-making and continuous cash burn threatened the business
- Outdated assortments, uncompetitive pricing, an immature and disconnected e-commerce offering and costly legacy structures reflected a lack of customer focus
- Actions
- Analyzed business performance to identify the main causes of losses and agree on priorities with management
- Restructured the cost base through operating model redesign, store closures, supplier renegotiations, supply chain reset and selective outsourcing
- Optimized store operations through workforce planning, productivity standards, performance metrics and incentive redesign
- Expanded services to create new income streams and reduce reliance on product margin
- Reinvested cost savings and services income into product margin to close channel price gaps and regain pricing competitiveness
- Rebuilt the customer offer across assortment, services and pricing, backed by tighter promotion governance and sales routines
- Connected stores and e-commerce with aligned pricing and a consistent customer journey across channels, including click and collect and ship from store
- Results
- Delivered €40m EBIT uplift, stopped cash burn and returned the business to profitability within 18 months
- Reduced the cost base by 25% through structural measures and store economics improvements
- Returned to sales and market share growth through a stronger omnichannel value proposition with better assortments, more competitive pricing and a stronger e-commerce offering