Stopped cash burn and restored profitability
Case study:
Stopped cash burn and restored profitability
- Situation
- Store-centric multichannel retailer faced a flat market with aggressive promotions and pricing pressure, resulting in sales decline and market share losses, with more than 20% of stores loss-making and continuous cash burn threatening the business
- Outdated assortments, uncompetitive pricing, an immature and disconnected e-commerce offering and historically grown and costly structures reflected a lack of customer focus
- Actions
- Established a performance fact base to pinpoint root causes, prioritize levers and align leadership on hard trade-offs
- 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 excellence routines
- Connected stores and e-commerce to deliver a consistent omnichannel experience with aligned pricing and a crosschannel customer journey, 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