Private label development – food retailer Turkey
A leading food retailer in Turkey wanted to improve profitability. A structured study of the market was conducted and the client’s performance benchmarked against world class comparators, with results highlighting the under-management of the gross margin.
After detailed analysis of possible methods of improvement, the best strategy, both immediate and long-term, was to focus on a sales increase of private label products.
A custom-made independent market research study was conceived with the client’s commercial operations to examine consumers’ current understanding of the retailer’s reputation in the private label area.
Analysis of results flagged discrepancies between the retailer’s self-image and how their products and brands were perceived by the public. There were, however, some inconsistencies in this result, with a few products achieving an appropriate or ideal standard in the public’s view. This allowed analysts to identify a number of success factors and the span between success and failure drew attention to an inconsistent strategy in the commercial operations of the retailer.
Workshops were set up to identify private label branding principles. Many important details such as quality control, detailed product specifications, labelling and branding were analysed. The next step was to benchmark current performance against best practice. As a result, new company expectations for private label branding were established and then applied to every item. This was vital in establishing a consistent and successful approach to this profitable area of business.
The result was immediate! A 10% increase in the share of private label products! Of course, a considerable improvement in the margin contribution also followed, more than had been budgeted for at the outset of the project.
The progress continues with increasingly more impressive results emerging continuously.
Business process redesign and cost reduction programme – health & beauty retailer Ukraine
A leading household and beauty retailer in the CEE became aware of far lower staffing levels of a similar concept store in Western Europe.
Concern emerged that Western European competition would be capable of market entry with potentially greater retail efficiencies and a resulting lower retail pricing position. This competitive edge posed a great threat to the client.
A detailed analysis of the client’s retail operation was set up and the results mapped against global best practice.
All processes were carefully documented and translated into a graphic format, to allow both management and our own consultants to easily search out efficiency failings.
Through detailed workshops involving representatives from all levels of retail operations, the retail organisation was reconstructed to increase efficiency. Processes were completely overhauled. Unnecessary bureaucracy was challenged and new job descriptions resulted. Performance-related pay initiatives were introduced to incentivise on-going improvement.
The result was a 35% reduction in labour hours!
Staff and management reported a feeling of greater empowerment and motivation (a great result for a staff reduction programme!). Remaining staff and management could earn up to 20% more and this drastically reduced labour turnover. Retaining talent and the reduced cost of training new employees was a welcome side effect.
Together with the performance-related pay structure the refocused retail operations department produced 47% higher productivity, 24% lower costs and a halving of its store personnel turnover rate.