The Oliver Wyman Retail Journal Vol. 3

In a retail landscape increasingly buffeted by online and hard discount formats, traditional players find themselves looking for answers. This latest volume of The Oliver Wyman Retail Journal provides perspectives on how to win in an increasingly tough environment. We address how to achieve like-for-like growth in stagnant and competitive markets; we examine the threat and the promise of on-line retailing; we discuss powerful ways of dealing with low-price competition; and we provide perspectives on such evergreen topics as margin management, reducing waste and driving down costs.

1How should retailers react to the changing retail environment?

Firstly, retailers must recognize that the world has changed, and in a big way. Then, ask what the customers want, and find ways to give it to them. That means differentiation at a micro-level: What product for what store for what customers at what price? This requires new capabilities, decision-making skills, that work at a very granular level. And it means harnessing analytics in a pragmatic, real-world way. Done right, productively takes off and share gain results. It is not an easy ride, but for those companies with vision, it is very do-able.
2How does Oliver Wyman work with retailers to address the like-for-like challenge?

Fundamentally, we develop strategies to drive companies rapidly up the “capability staircase”. We establish what capabilities they have today, where they need to “add muscle”, we agree and plan, and then we realize that plan together. Typically, this means upgrading skills in pricing, promotional management, localizing assortments, improving store operations, and aligning supply chain follow-through. Crucially, it also means bringing the organization, generally many thousands of people, along for the ride!
3What is the biggest challenge facing retailers today?

While most people say it is the disruption brought about by digital players, we believe the real challenge is much closer to home. In more and more markets, there is hardly any volume growth, and way too many stores. There is simply no more mileage to be had from opening new stores. And that means the only viable avenue for growth in sales is growth in productivity. Every year, more and more must be squeezed out of the same space. It’s become a zero-sum game, and the winners will be the ones who make the best decisions.