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Flevy Management Insights Case Study
Sustainable Growth Strategy for Apparel Retailer in Sustainable Fashion

There are countless scenarios that require Business Process Re-engineering. Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Business Process Re-engineering to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

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Consider this scenario: An established clothing and accessories store specializing in sustainable fashion is facing the strategic challenge of business process re-engineering.

The retailer has experienced a 20% decline in foot traffic and a 15% decrease in sales over the past two years, attributed to the rise of e-commerce and changing consumer preferences towards online shopping. The organization's primary strategic objective is to re-engineer its business processes to enhance customer experience, streamline operations, and adopt a more robust digital presence.

This organization, despite its strong commitment to sustainability and ethical fashion, is at a crossroads due to evolving market dynamics and consumer behaviors. The underlying issues seem to stem from outdated operational processes and a slow adaptation to digital marketplaces, which have become increasingly vital for retail success. Additionally, there appears to be a disconnection between the brand's online and offline customer engagement strategies, leading to missed opportunities in building customer loyalty and expanding market reach.

Environmental Analysis

The clothing and accessories retail industry, particularly in the sustainable fashion niche, is experiencing rapid transformation due to shifting consumer values towards sustainability and ethical production. However, the rise of digital platforms and changing shopping habits pose significant challenges for traditional retailers.

  • Internal Rivalry: High, with both established brands and new entrants vying for market share in the sustainable fashion sector.
  • Supplier Power: Moderate, as retailers seek to establish partnerships with ethically-sourced and sustainable suppliers.
  • Buyer Power: High, given the abundance of choices and ease of access to global brands through online platforms.
  • Threat of New Entrants: Moderate, due to the growing interest in sustainability but tempered by the challenges of establishing a sustainable supply chain.
  • Threat of Substitutes: Low to moderate, as the unique value proposition of sustainable fashion differentiates it from fast fashion alternatives.

  • Increasing digital engagement: This trend offers the opportunity to enhance online shopping experiences and integrate omnichannel retail strategies, but also introduces the challenge of competing with purely digital platforms.
  • Growing demand for transparency: Consumers increasingly demand transparency in production and supply chain practices, offering an opportunity for brands with strong sustainability credentials but a risk for those unable to provide clear sustainability evidence.

Learn more about Supply Chain Value Proposition Retail Industry Environmental Analysis

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Internal Assessment

The organization boasts a strong commitment to sustainability and a loyal customer base appreciative of ethical fashion. However, it struggles with digital transformation and operational inefficiencies.

The Benchmarking Analysis reveals that the organization lags behind industry leaders in e-commerce capabilities and digital marketing strategies, impacting its ability to attract and retain the digitally-savvy consumer.

The Organizational Structure Analysis suggests that the current hierarchical model slows decision-making and innovation. A more agile structure could enhance responsiveness to market changes.

The JTBD (Jobs to be Done) Analysis indicates that customers seek not only sustainable apparel but also a seamless and engaging shopping experience across all channels, a need currently unmet by the organization.

Learn more about Digital Transformation Agile Organizational Structure

Strategic Initiatives

  • Business Process Re-engineering for Digital Transformation: Revamp internal processes to support a robust e-commerce platform and integrate digital technologies across operations. This initiative aims to enhance the customer experience online and in-store, driving sales and improving operational efficiency. The expected value includes increased revenue from online sales and cost savings from improved operational efficiencies. This will require investment in technology infrastructure and training for staff.
  • Omnichannel Retail Strategy Development: Create a seamless shopping experience that integrates in-store and online channels. This initiative aims to increase customer engagement and loyalty, contributing to higher sales and customer retention. The source of value creation comes from leveraging existing brand loyalty within an enhanced digital framework. Resource requirements include marketing, technology development, and staff training.

Learn more about Customer Experience Strategy Development Value Creation

Business Process Re-engineering Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.

What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated.
     – John E. Jones

  • Online Sales Growth: An increase in online sales will indicate successful digital transformation and market penetration.
  • Customer Engagement Metrics: Enhanced engagement online and in-store, measured through social media interactions and in-store events participation, will reflect the success of the omnichannel strategy.

These KPIs will offer insights into the effectiveness of the strategic initiatives in driving digital transformation and enhancing customer engagement. A positive trend in these metrics will signal progress towards the organization's strategic objectives.

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Business Process Re-engineering Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in Business Process Re-engineering. These resources below were developed by management consulting firms and Business Process Re-engineering subject matter experts.

Stakeholder Management

Effective execution of strategic initiatives will depend on the active involvement and collaboration of both internal and external stakeholders, including employees, technology partners, and suppliers.

  • Employees: Essential for implementing changes in business processes and delivering the omnichannel experience.
  • Technology Partners: Critical for the development and maintenance of e-commerce platforms and digital tools.
  • Suppliers: Their cooperation is vital in maintaining sustainable and ethical sourcing practices during and after the transition.
Stakeholder GroupsRACI
Technology Partners

We've only identified the primary stakeholder groups above. There are also participants and groups involved for various activities in each of the strategic initiatives.

Learn more about Stakeholder Management Change Management Focus Interviewing Workshops Supplier Management

Business Process Re-engineering Deliverables

These are a selection of deliverables across all the strategic initiatives.

  • E-Commerce Platform Development Plan (PPT)
  • Omnichannel Strategy Framework (PPT)
  • Business Process Re-engineering Roadmap (PPT)
  • Digital Marketing Strategy Document (PPT)

Explore more Business Process Re-engineering deliverables

Business Process Re-engineering for Digital Transformation

The organization adopted the Value Chain Analysis framework, as proposed by Michael Porter, to guide its Business Process Re-engineering for Digital Transformation initiative. Value Chain Analysis is instrumental in understanding how each business activity contributes to the overall value delivered to the customer and identifying areas of improvement for achieving competitive advantage. This framework was particularly useful for dissecting the organization's operations into primary and support activities, thereby illuminating areas ripe for digital enhancement.

Following the adoption of the Value Chain Analysis, the organization undertook several steps to implement the framework effectively:

  • Deconstructed the organization's operations into primary activities such as inbound logistics, operations, outbound logistics, marketing and sales, and service, as well as support activities like procurement, technology development, human resource management, and firm infrastructure.
  • Assessed each activity for potential digital transformation opportunities, prioritizing those with the highest impact on customer value and operational efficiency.
  • Implemented digital tools and platforms in identified key areas, starting with operations and marketing and sales, to streamline processes and enhance the customer online experience.

The Digital Capability Maturity Model (DCMM) was also deployed to assess and develop the organization's digital transformation maturity. This model helped in benchmarking the organization's current digital capabilities against industry standards and creating a roadmap for digital maturity. The process involved:

  • Evaluating the current level of digital capabilities across the organization using the DCMM's five maturity levels: Initial, Managed, Defined, Quantitatively Managed, and Optimizing.
  • Identifying gaps in digital capabilities and formulating strategic initiatives to elevate the organization to the next maturity level.
  • Implementing targeted digital initiatives, including the development of an e-commerce platform and the integration of digital marketing strategies, to progress through the maturity levels.

The results of implementing both the Value Chain Analysis and the Digital Capability Maturity Model frameworks were transformative. The organization realized a significant enhancement in operational efficiency and customer engagement. Digital transformation initiatives, guided by these frameworks, led to a streamlined value chain that not only reduced operational costs but also improved the customer experience. The adoption of digital tools and platforms, identified through the Value Chain Analysis, and the strategic approach to digital maturity, as outlined by the DCMM, equipped the organization to compete more effectively in the digital marketplace.

Learn more about Maturity Model Competitive Advantage Business Process Re-engineering

Omnichannel Retail Strategy Development

For the development of an Omnichannel Retail Strategy, the organization utilized the Customer Journey Mapping framework. This approach allowed the team to visualize the entire customer journey across multiple touchpoints and channels, identifying areas where the customer experience could be enhanced. Customer Journey Mapping proved invaluable for understanding the complexities of customer interactions with the brand, both online and offline, and for designing a seamless, integrated shopping experience.

As part of the Customer Journey Mapping process, the organization:

  • Mapped out all existing customer touchpoints across in-store, online, and mobile channels, highlighting moments of friction and opportunities for engagement enhancement.
  • Developed targeted strategies for each identified touchpoint to ensure consistency and continuity in the customer experience, leveraging data analytics for personalized customer interactions.
  • Implemented technology solutions, such as integrated CRM systems and mobile apps, to facilitate a smooth transition between channels for customers, ensuring a unified brand experience.

Additionally, the organization applied the Service Blueprint framework to meticulously plan and execute the omnichannel strategy. This framework detailed the operational processes behind each customer touchpoint, ensuring that the backend operations supported a seamless front-end customer experience. The implementation involved:

  • Identifying key customer actions, frontstage (customer-facing) interactions, and backstage (internal) processes for each touchpoint within the omnichannel strategy.
  • Aligning internal processes and training employees to deliver a consistent and cohesive customer experience across all channels.
  • Integrating feedback loops into each touchpoint to continuously refine and improve the customer journey based on real customer data and insights.

The successful implementation of the Customer Journey Mapping and Service Blueprint frameworks significantly enhanced the omnichannel retail experience. Customers reported higher satisfaction levels due to the seamless integration of shopping channels and personalized interactions. Internally, the organization benefited from increased operational efficiencies and a deeper understanding of customer behaviors and preferences, leading to more effective marketing and sales strategies. The strategic focus on the customer journey and operational alignment around omnichannel objectives positioned the organization to capitalize on the growing trend of integrated retail experiences.

Learn more about Customer Journey Mobile App Customer Journey Mapping

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Implemented digital transformation initiatives, leading to a 15% increase in online sales within the first year.
  • Enhanced customer engagement metrics, with a 25% rise in social media interactions and a 20% increase in in-store event participation.
  • Streamlined operations through digital tools, reducing operational costs by 8%.
  • Developed and executed an omnichannel retail strategy, resulting in a 10% improvement in customer satisfaction scores.
  • Increased employee efficiency and morale by adopting a more agile organizational structure.

The results of the business process re-engineering initiative indicate a successful stride towards digital transformation and operational efficiency. The 15% increase in online sales and the significant rise in customer engagement metrics underscore the effectiveness of the digital and omnichannel strategies in addressing the challenges of declining foot traffic and sales. The reduction in operational costs by 8% further validates the positive impact of streamlining operations through digital tools. However, while these results are promising, the initiative fell short in fully capitalizing on the potential for market share growth, as indicated by the moderate improvement in customer satisfaction scores. This suggests that while the omnichannel strategy enhanced the customer experience, there may have been missed opportunities in fully integrating and optimizing all customer touchpoints. Additionally, the increase in employee efficiency and morale points to a successful organizational restructuring, yet the long-term sustainability of these changes requires ongoing attention.

Given the mixed results, the next steps should focus on deepening the omnichannel integration to capture and leverage customer data more effectively across all touchpoints. This could involve investing in advanced analytics and AI to personalize the customer experience further and predict buying patterns. Additionally, expanding the digital marketing strategy to include emerging platforms and technologies could enhance online engagement and attract a broader customer base. Finally, sustaining the agile organizational structure through continuous training and development will be crucial in maintaining operational efficiency and employee morale. These recommendations aim to build on the current successes while addressing areas for improvement, positioning the organization for long-term growth in the competitive sustainable fashion market.

Source: Sustainable Growth Strategy for Apparel Retailer in Sustainable Fashion, Flevy Management Insights, 2024

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