Bold Moves in Retail

Retail in the Netherlands is in a state of turmoil. 5 bold moves to shake things up.

Online “pure players” have stimulated online sales to 13 percent of all clothing retail sales and 20 percent of all electronics retail sales. Several brick and mortar (and multichannel) retailers have grown with value propositions founded on new, innovative business models and supply chains.


Increasing number of retailers are disappearing from the streets

In 2013 we predicted that by 2020, 17 to 23 percent of the retail sales area would become redundant due to structural changes in consumer behaviours. Three years down the road we indeed see an acceleration in retail brands disappearing from the high street, and not only with small or mid-sized retail chains. The fact that most of these happened during a period of economic recovery should be a telltale sign that more rigorous changes are required for distressed retail.

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Footprint 2020

It’s time for bold moves

Rationalizing assortment, optimizing supply chains, or reducing overhead costs is not enough to survive. It’s time for bold moves: measures that might significantly impact a company, but might be necessary in order to survive and thrive. In this series of blog posts, we will explore five bold moves for retailers, actions that may seem risky or even ridiculous at first sight. Although deliberately stated in a provocative way, and not intended as direct advice, we believe retailers need to seriously consider and thoroughly assess possible adaptations and implications for their situation.


Bold Move #1: Start a price war

Start a price war

Pure-play online retailers and new entrants often challenge prevailing price levels and pricing strategies. As a result, incumbents can suffer from an unfavorable price image. A bold move would be to start a price war and tackle the issue head-on.

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Bold Move #2: Cut your assortment by half

Cut your assortment by half

Cutting back on the assortment involves a risk of losing the sales value for the delisted products or, even worse, losing customers that were loyal to that particular product entirely. But is this a realistic scenario and are the risks as big as expected?

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Bold Move #3: Stop all non-core activities

Stop all non-core activities

When the core store-based retail business is under pressure, the organization needs to focus on stopping the bleeding and turnaround of the core business. Venturing into new businesses will at best distract from plugging the holes of a sinking vessel. But at worst, it might give the impression that the boat is still afloat while the holes remain unnoticed.

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Bold Move #4: Close one in four stores

Close one in four stores

We estimate that between 20 and 40 percent of stores in a regional or national retail network are loss-making after allocating corporate overhead. Still, retailers are reluctant to close stores, as they will presumably lose all revenues from that store and give away their market share to competition.

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Bold Move #5: Ally with the enemy

Ally with the enemy

Retailers that lack the capabilities/funds to set up and run an e-commerce business should consider leveraging the platform and services of established online competitors.

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