Retail Co

Case interview (AC)

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Situation summary (Retail Co)

Situation: • Retail Co is a national mall-based retailer with 1,000

stores that average 65K square feet
• Retail Co sells a variety of products and revenue has been
flat over the past 5 years
• Sales and profits in 2003 were $10B and $1B, respectively

Complication: • Retail Co profits have declined each of the past 5 years

• National retail competitors are threatening to steal market
share from Retail Co in its core product lines

Key questions: • 1) What has driven Retail Co’s decline in profitability?

• 2) What should Retail Co do to increase profitability and
combat the competition it is facing?

NYC Retail Co case 2

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Retail Co financial data

Revenue CAGR
10 10 10 10 10 10 (98-03)
$10B
-20%
Profit
8 0%
Other
6 Costs

4 Cost 7%
of
2 Goods
Sold

0
1998 1999 2000 2001 2002 2003

Unit
Sales
Growth: 0.0% -2.0% -2.0% -2.1% -2.1% -2.1%

NYC Retail Co case 3

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not toCobecase
relied on by any 3rd party without Bain's prior written consent.
Product category cost data

YOY increase in prices to suppliers

1.5%

1.0 Inflation
Other
Product 3

0.5
Product 2

Product 1

0.0
1998 1999 2000 2001 2002 2003

NYC Retail Co case 4

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not toCobecase
relied on by any 3rd party without Bain's prior written consent.
Product sales per store

Product 1 Product 2 Product 3 Other

• Total Sales
$1.5B $3.0B $2.0B $3.5B
(2003):

• Sales per Store

___ ___ ___ ___
(2003):

NYC Retail Co case 5

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not toCobecase
relied on by any 3rd party without Bain's prior written consent.
Sales by product

Revenue
CAGR
10 10 10 10 10 10 (98-03)
$10B

8 Other 0%

6
Prod -10%
3
4
Prod 11%
2
2
Prod
1 0%
0
1998 1999 2000 2001 2002 2003

NYC Retail Co case 6

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not toCobecase
relied on by any 3rd party without Bain's prior written consent.
Product financial data

Product 1 Product 2 Product 3 Total

Financial Data
• Sales per Store: $1.5M $3.0M $2.0M $10.0M

• Square Feet per

5K 10K 20K 65K
Store:

• Sales/Square
___ ___ ___ $154
Foot:

• Profit/Square
$60 $30 $40 $15
Foot:

• Profit Margin: ___ ___ ___ 10%

Market Data
• RetailCo Share: 8% 30% 2% N/A
• Market Leader
10% 30% 15% N/A
Share:

NYC Retail Co case 7

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relied on by any 3rd party without Bain's prior written consent.
Square footage data

Square footage per store

30
30K

20

Key Competitor
20

10

Retail Co
10
5 6 5

0
Product 1 Product 2 Product 3

NYC Retail Co case 8

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not toCobecase
relied on by any 3rd party without Bain's prior written consent.
Recommendations

NYC Retail Co case 9

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not toCobecase
relied on by any 3rd party without Bain's prior written consent.