An Independent Strategic Review & Implementation For Large International Retailer

​This knowledge is brought to you by Witold Kawalski, just one of the thousands of top management consultants on Expert360.

 Table of Contents

1. What Made This Project Stand Out?
2. The Evolution Of The Client's Business
3. Operational Effectiveness To Strategic Approach
4. Written Retail Strategy To Actionable Plans
5. Shift Keepers To Store Managers
6. Traditional HR To People Development
7. P&L Responsibility Shift
8. Defining KPIs
9. International Expansion
10. Functional Organisation To Matrix Approach
11. Reducing Micro-Management
12. Reducing Manual Procedures
13. Developing Soft Skills At Management Level
14. Shifting From Internal Focus To CSR
15. Multichannel To Omnichannel
16. Strategic Pan-European Account
17. HR As A Business Partner
18. Introducing Focused Development Programs
19. Summary

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Project Summary

Client: Sport/fashion retailer, operating in Europe. Over the 5 years of our cooperation, their revenues grew 3.5 times, from €50 million to €175 million. They run 4 distinctive store networks in 3 traditional retail channels: premium, mid-price and low price retail, with hundreds of multi-brand and several mono-brand stores in total. The client also has exclusive distribution (wholesale) agreements with some European and global brands.

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They also have a strong e-commerce business. Although the company is a leading sport/fashion retailer in one European country, it spans across several other European countries with numerous regular and online stores, and its growth plans include further expansion. They are a strategic, multi-brand partner for top global sport/fashion brands.

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• ‍Company Size: Large international enterprise
• ‍Project Type: Strategic review and implementation
• ‍Location: Europe, onsite
• ‍How: A holistic analysis of the entire business, followed by implementation work to bring the strategy into effect. The outcome of the project was extremely successful.  

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What Made This Project Stand Out?

  The consulting project that I found the best among all that I have ever completed met the following criteria:

1. It produced measurable business results, which exceeded my client’s expectations.
2. I managed to gain full trust of my client, which helped them open up for much deeper cooperation and partnership.
3. Despite the initial, focused scope of work, I convinced the client to look at their business holistically.
4. My client managed to evolve from managing tactical, operational effectiveness to real strategic planning.
5. I made my client invest heavily in developing human resources with consumer-centric approach.
6. The client invested in systems and developed processes to support fast growth.
7. In practice, my assignment was, and still is, a mix of consulting, mentoring and training, which made the project very attractive for me, too.
8. My goal was to provide inspiration, to verify the existing strategic priorities, to show alternative solutions, to help the client turn ideas into practice, all in the shortest possible time and in the most cost-effective way.
   
   I think that the main barrier for a company to hire an external consultant is that they are often perceived as not fully competent, despite initial declarations, and/or:
   Charge too much for their services (selling the same know-how many times, to many clients);
   Want to provide services for as long as possible (to cover their fixed costs);
   Prefer doing projects for their clients, instead of enabling them to stand on their own feet (more consulting hours).

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For me, the ideal client is the one who can take my recommendations to the next level quickly and develop them in a creative way without being pushed to do so from my side. Such clients are not afraid of getting out of their comfort zone.

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There is no bigger satisfaction for a consultant that to see that his/her recommendations are absorbed and then, implemented.  

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The Evolution Of The Client’s Business

From Operational Effectiveness To Strategic Approach

With the help of one of the top 5 global consulting companies, my client prepared their first strategic plan which addressed the client’s mission, code of ethics, focus on consumers, importance of consumer experience, target groups, product assortment for different retail concepts, 3-year growth plans, etc.

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It was a big step ahead for my client who had focused on operational effectiveness and tactical approach only. When I looked at the strategy, it was methodologically correct, but did not include the role of store managers in upgrading consumer experience and in KPI management at the store level. It was clear to me that my consulting predecessors were not retail specialists.  

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Figure 1: The development of a concept of organisation to support consumer-centric approach to the client’s target group. On the left, the diagram shows one element of the strategic plan prepared for the client by a big 5 consulting company. On the right, the diagram shows the same element amended by Witold Kowalski, which adds store managers and retail area managers to the concept.   Adding store and retail area managers to the concept was necessary to identify and influence key people directly responsible for managing direct, face-to-face relationships with the client’s target group.  

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Written Retail Strategy To Actionable Plans

The implementation of general strategic guidelines remains a challenging task for many companies. Many strategies exist on paper only, with employees not even being informed in detail about what comes out from the strategy for them in their everyday work.

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My identification of store managers and retail area managers as a key factor in upgrading store consumer experience and improving store business results was an important finding. They were the client’s brand ambassadors, but their low motivation, inadequate training and high rotation made it impossible to implement consumer-centric approach in a consistent way. In the revised strategy, the following activities have been planned:

• Reorganisation of store supervision (fewer stores per area manager);
• Management and soft skills training for store managers and retail area managers – 2 full-day trainings in groups of 15 people;
• New, more aggressive motivation systems which included revenue, retail KPI and productivity targets;
• Redefinition of tasks and role of store manager as a quasi micro-entrepreneur;
• Automation of more processes at the store level;
• Reorganisation of store customer service during “peak hours” on weekends to maximise CR.

Shift Keepers To Store Managers

Store managers were treated as senior shop assistants, overburdened with additional administrative tasks, with motivation system based on their individual sales, without soft skills and sufficient knowledge to manage their store teams and retail KPIs well. The difference between shift keepers and real store managers is presented in Figure 2 below:

Figure 2: The identified differences between a passive shift keeper and model store manager By having real store managers in the majority of stores, the client managed to increase the average conversion rate (CR) and average basket (AB) by one digit percentage year-on-year. The new motivation system for store teams rewarded not just reaching the sales target, but also retail KPIs and labour productivity objectives.  

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Traditional HR To People Development

The client’s HR department performed better than many companies without HR function, or with just recruitment and payroll services.

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With my help, HR assigned necessary competences to each position in the company, developed and implemented Manager Academy – a 6-month training program to address gaps in competences and management knowledge at all organisational levels.  

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Profit and Loss (P&L) Responsibility Shift

The client was a typical company where top management was responsible and managed the company P&L in detail. The lower levels of management were not aware of margins and costs they were supposed to control.

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They did not know their budgets, except for net revenue targets, one month in advance. With the rapidly growing revenues, top managers were unable to execute their plans without delegating part of P&L responsibility.  

Figure 3: The development of P&L responsibility delegation to lower management levels over 5 year period As a result of the P&L responsibility moved to lower management levels, the client’s profitability increased by about 1.5 percentage points, with the rapidly growing net revenues.  

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Defining KPIs

The store management and shop assistants were supposed to focus on increasing Average Basket (AB) and Units per Transaction (UPT). In the meantime, the company set up traffic counters to measure Conversion Rate (CR).

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However, the store teams did not fully understand the relationship between these 3 KPIs and how to grow them to reach monthly targets through better customer service. The store customer service (CS) procedure was in place, but it was not followed consistently. There was no direct incentive for the store teams to increase retail KPIs.  

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Figure 4: The presentation of importance retail KPIs and difficulty in increasing them Increasing CR are not just about executing sales for decided clients (which is easy), but also about convincing undecided customers to buy (which is difficult). AB is somehow limited by the limited buying power of clients. Increasing UPT does not always result in considerable AB increase (for example the second item is for €1 only). The real mastery is to    

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Figure 5: The development of areas & KPIs included the client’s store motivation system. By adding new, precise targets to the store motivation system, the store managers were given additional incentives to analyse and increase KPIs to maximise the store potential, even over the revenue targets.  

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International Expansion

When I started consulting for the client, they were the number 1 market in their home country, but with underpenetrated low-income market in smaller cities. Now, the firm is present in 6 countries, with plans to conquer several more. I helped the firm enter one very important, but demanding European market, which proved to be a good test for next market entries.  

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From Functional Organisation To Category Matrix Approach

It took my client 1.5 years to follow my recommendation to change its organisation from functional to matrix. Because they have 4 different retail chains with non-overlapping consumer segments (price range, city size, consumer profile, etc.), the company has finally built organisational silos to support each of them separately (from ordering to sell-through).

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With that move, they got much closer to their consumers, further developed their value proposition and sharpened the organizational focus to provide adequate customer service.

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Getting Rid Of Micro-Management

I used mentoring and coaching in relations with the top management to support their transition from micro-managing to real task delegation. The growing scale of business made that move inevitable anyway.

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From manual procedures to system based approach

With stronger store managers, the next step was to free up their time for better management of the store selling process. It was not about POS systems, but about simplifying some store operating procedures, making them automatic and moving some tasks from stores to the headquarters.  

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Developing Soft Skills In Management At All Levels

There is still quite underestimated factor in management called “soft skills”. Its use in managing people at all levels, from stores to central office, is a part of non-material motivation. It is not just about money to be earned.

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I taught the client’s managers how to enrich already existing, friendly corporate culture, how to give and receive effective feedback, how to delegate inspiring tasks, to prepare and execute development plans. I learned that too many managers of my client were driven by negative beliefs about managing others, instead of focusing more on positive motivation.  

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Figure 6: The presentation of elements of positive and negative motivation in management As a CEO, I have experienced that positive motivation works much better in management and supported my client in reinforcing already existing, friendly corporate culture.

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Shift To CSR

I convinced my client to team up with a charity organisation to sell plastic bags in their stores to support charity projects. The reaction of store clients was very positive and many of them bought more bags that they needed to carry their purchased products.  

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Multichannel to Omnichannel Strategy

It is not enough to be present offline and online these days. The company should integrate both channels as one in the eyes of consumers. The example of innovation that I helped introduce was the use of iPads in the stores to enable consumers interested in buying products which were out of store’s stock, but available in the central warehouse or another store.

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With the help of iPads, the stores could increase CR and consumer satisfaction with deliveries realised within 48 hours. This is also an example of taking my initial recommendations to the next level. I recommended my client to do exit interviews for clients leaving their stores with a help of iPads. When the research was completed, the company started thinking about how to use the purchased iPads in the future.

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The idea of using iPads for selling company product range with use of total company stock was the result of brainstorming.  

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Strategic Pan-European Account

With the growing revenues, deep market penetration and upgrading store concepts, the client started to be perceived as an important, regional player in the European market for its suppliers.

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The brands considered my client as a place to communicate their new product launches and to present their seasonal product initiatives. The company competes, with success, with some global retail chains in Europe.

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Their strong financial discipline, as opposed to some corporations with weaker financial control, will enable my client to continue growing in a very cost-effective way.  

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HR As A Business Partner

With an attitude of “the company founder knows it all” and limited access to “company secrets” for lower management levels, my client was reluctant to open up for new managers from the market and underestimated potential of own managers for internal promotion.

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With additional tools proposed by me (mentoring, 360 evaluation, soft skills training, headhunting, store manager potential evaluation), the owners decided to hire more managers from the market and started to test their managers with new, challenging tasks as a condition for the future opportunity.  

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Introducing Focused Development Programs

Like many other companies, my client was losing a lot of time on making new employees fully productive. The on-boarding procedure did not exist or was implemented inconsistently across the organisation.

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It was especially valid for stores, who suffered from high rotation and low awareness on how to provide perfect customer service. My idea of introducing blended e-learning (combining online training with practical exercises and follow up) was introduced.

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The company developed e-learning platform with training modules for main positions in the organisation. The development opportunity is still how to make managers and employees use it permanently as an objective development tool.  

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Summary

My consulting assignment with the described client went far beyond “service provider and client” relation. If an independent consultant proves to a client that his/her motivation is to help the client as fast and as effectively as possible to “stand on their own feet”, it is a decisive factor for a client to continue working with such a consultant.

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Many consultants work well in their specific niche and it is fine, but there is a huge potential for consultants with a holistic knowledge, usually gained in previous general management jobs at several international companies.

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If consulting clients are open for feedback, they can benefit a lot from the complete “cat-scan” overview of their business to discover weaknesses or opportunities of which they are not aware.