Pivoted business model and reset cost base to restore profit
Case study:
Pivoted business model and reset cost base to restore profit
- Situation
- An international category specialist had expanded rapidly through customer acquisition, geographic expansion and acquisitions
- Following the end of the market boom, growth slowed while industry-wide overstock led to intense price competition
- Declining sales and margins pushed the company into losses and created significant liquidity pressure
- Actions
- Diagnosed the drivers of decline and sized the e-commerce opportunity, including target segments, migration potential of the existing customer base and competitive dynamics
- Defined an e-commerce pure-play strategy with clear value proposition, pricing logic and assortment architecture
- Designed a controlled customer migration and digital go-to-market approach to acquire younger customers and shift part of existing customer revenues online
- Captured synergies with the new owner across assortment, supply chain and IT to accelerate impact
- Prepared and coordinated a comprehensive restructuring program, including workforce reduction, outsourcing, closure and sale of non-core activities and exit from legacy channels
- Results
- E-commerce pure-play implemented and breakeven reached, completing the exit from legacy channels
- Cost base reduced by c. 35% to support a smaller yet profitable e-commerce only business through workforce reduction, outsourcing and exit of non-core activities
- Online sales increased and legacy revenues stabilized through controlled customer migration