Want FREE Templates on Organization, Change, & Culture? Download our FREE compilation of 50+ slides. This is an exclusive promotion being run on LinkedIn.

Flevy Management Insights Case Study
Global E-Commerce Strategy for Apparel Manufacturing SMB

There are countless scenarios that require Employee Retention. Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Employee Retention to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, best practices, and other tools developed from past client work. Let us analyze the following scenario.

Reading time: 9 minutes

Consider this scenario: The organization is a small to medium-sized business specializing in sustainable apparel manufacturing, currently facing challenges with Employee Retention.

Externally, it is experiencing a 20% annual increase in material costs and a competitive online marketplace that's eroding margins. Internally, the company struggles with maintaining a skilled workforce, leading to a 15% decrease in production efficiency. The primary strategic objective of the organization is to enhance its e-commerce presence globally while improving operational efficiency and employee retention to ensure sustainable growth.

The sustainable apparel manufacturing SMB is at a critical juncture, dealing with escalating material costs and a fiercely competitive e-commerce landscape. These challenges are compounded by internal inefficiencies and a high turnover rate among skilled employees. Such conditions suggest that the root causes of the organization's struggles may lie in its under-optimized online sales channels and inadequate employee engagement and retention strategies. Enhancing digital capabilities and fostering a more motivating workplace environment could be pivotal in reversing these trends.

Competitive Market Analysis

The e-commerce industry for apparel is witnessing rapid growth, driven by changing consumer preferences towards online shopping and sustainable products. However, this growth also brings increased competition and higher customer expectations.

Examining the industry dynamics reveals:

  • Internal Rivalry: The market is highly competitive with numerous brands vying for consumer attention, especially in the sustainable apparel niche.
  • Supplier Power: Suppliers hold significant power due to the specialized nature of sustainable materials, which are in high demand but limited supply.
  • Buyer Power: Consumers wield considerable power, facilitated by the ease of comparing options online and switching brands.
  • Threat of New Entrants: The barrier to entry is relatively low in e-commerce, leading to an ongoing threat of new, innovative competitors.
  • Threat of Substitutes: The main substitute threat comes from conventional apparel manufacturers who dominate the broader market.

Emerging trends include a shift towards personalized shopping experiences and a growing emphasis on sustainability. These point to significant changes in industry dynamics:

  • Increased demand for sustainable and ethically produced apparel, presenting opportunities for niche market growth but also the risk of commoditization as more players enter the market.
  • The rise of direct-to-consumer (DTC) models, offering opportunities for higher margins and better customer relationships, but requiring substantial investment in digital marketing and logistics.
  • Advancements in AI and machine learning for personalized shopping experiences, posing both an opportunity for differentiation and a risk for those unable to invest in these technologies.

Learn more about Machine Learning

For effective implementation, take a look at these Employee Retention best practices:

5 Dimensions of Employee Engagement (24-slide PowerPoint deck)
Lesson 4 - How to Hire and Retain the Right People (15-page Word document)
Recruiting, Selection & Retention: Qualifications & Diversity Screening (4-page PDF document and supporting Word)
Recruiting, Selection & Retention: Diversity Business Case Assessment (22-page PDF document)
Recruiting, Selection & Retention: Retain Diverse Employees (4-page PDF document)
View additional Employee Retention best practices

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Internal Assessment

The organization has established a solid reputation for its commitment to sustainability and quality in the apparel industry. However, it faces challenges in scalability, digital marketing effectiveness, and employee retention.

SWOT Analysis

Strengths include a strong brand identity in sustainability and a loyal customer base. Opportunities lie in expanding the e-commerce platform to international markets and leveraging advanced digital marketing strategies. Weaknesses are evident in the organization's digital infrastructure and employee engagement strategies. Threats stem from intensifying competition and the volatility of material costs.

VRIO Analysis

The brand's commitment to sustainability is a valuable and rare attribute that offers a competitive advantage. However, the current digital capabilities and organizational culture are neither rare nor costly to imitate, highlighting areas for strategic focus.

Capability Analysis

Success in the global e-commerce apparel market requires excellence in digital marketing, supply chain management, and customer experience. While the organization has a strong ethical foundation and brand identity, it must enhance its digital capabilities and operational efficiencies to maintain competitiveness.

Learn more about Customer Experience Supply Chain Management Competitive Advantage

Strategic Initiatives

Based on the industry dynamics and internal capabilities, the leadership team has defined strategic initiatives to pursue over the next 3-5 years .

  • Digital Transformation and E-commerce Expansion: This initiative aims to overhaul the company's e-commerce platform and expand its digital footprint globally. The intended impact is increased online sales and market share. The value creation comes from tapping into new markets and improving the online customer experience, expected to drive significant revenue growth. Resources required include investment in digital infrastructure and expertise in online retailing.
  • Employee Engagement and Retention Program: Focused on improving workplace culture and employee satisfaction to reduce turnover rates. The intended impact is enhanced operational efficiency and innovation. The value comes from creating a more motivated and productive workforce, leading to improved production efficiency and innovation. This will require resources for staff development programs and improved HR practices.
  • Sustainable Supply Chain Optimization: Aimed at increasing the efficiency and sustainability of the supply chain to manage costs and ensure ethical sourcing. The expected impact is reduced costs and enhanced brand reputation. The value creation stems from operational cost savings and strengthened brand loyalty among eco-conscious consumers. This initiative will need resources for supply chain analysis and partnerships with sustainable suppliers.

Learn more about Supply Chain Analysis Supply Chain Value Creation

Employee Retention 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.

Measurement is the first step that leads to control and eventually to improvement.
     – H. James Harrington

  • Online Sales Growth: To measure the effectiveness of the digital transformation and e-commerce expansion initiative.
  • Employee Retention Rate: To gauge the success of the employee engagement and retention program.
  • Supply Chain Cost Reduction: To assess the efficiency gains from the sustainable supply chain optimization initiative.

These KPIs provide insights into the organization's progress toward its strategic objectives, highlighting areas of success and opportunities for further improvement.

For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

Learn more about Flevy KPI Library KPI Management Performance Management Balanced Scorecard

Employee Retention Best Practices

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

Employee Retention Deliverables

These deliverables represent the outputs across all the strategic initiatives.
  • E-commerce Platform Overhaul Plan (PPT)
  • Employee Engagement Strategy Framework (PPT)
  • Sustainable Supply Chain Optimization Model (Excel)
  • Digital Marketing Roadmap (PPT)

Explore more Employee Retention deliverables

Digital Transformation and E-commerce Expansion

The organization adopted the Balanced Scorecard and the Blue Ocean Strategy to guide its Digital Transformation and E-commerce Expansion initiative. The Balanced Scorecard, developed by Robert S. Kaplan and David P. Norton, is a strategic planning and management system used for aligning business activities to the vision and strategy of the organization, improving internal and external communications, and monitoring organizational performance against strategic goals. It proved invaluable for integrating and balancing traditional financial measures with critical operational metrics for digital transformation success. The Blue Ocean Strategy, formulated by W. Chan Kim and Renée Mauborgne, focuses on creating new market space (or "Blue Oceans") that renders competitors irrelevant, which was particularly relevant for differentiating the company’s e-commerce platform in the crowded online apparel market.

  • Developed a Balanced Scorecard that included financial metrics, such as online sales growth and cost savings from digital efficiencies, alongside customer metrics like online engagement rates and digital customer experience scores.
  • Employed the Blue Ocean Strategy by identifying unmet needs in the sustainable apparel market and developing unique offerings, such as a customizable apparel line and a virtual fitting room feature to enhance the online shopping experience.

The implementation of these frameworks led to a significant increase in online sales and market share, with the company successfully establishing a unique position in the sustainable apparel e-commerce space. The Balanced Scorecard ensured that the strategic focus remained balanced and aligned with the company’s overall vision, while the Blue Ocean Strategy enabled the organization to break away from intense competition and tap into new market opportunities.

Learn more about Digital Transformation Strategic Planning Balanced Scorecard

Employee Engagement and Retention Program

For the Employee Engagement and Retention Program, the organization leveraged the Job Characteristics Model and the Employee Value Proposition (EVP) framework. The Job Characteristics Model, proposed by Hackman and Oldham, suggests that jobs can be designed to enhance employee motivation, satisfaction, and performance by focusing on five core dimensions. This framework was instrumental in restructuring roles to increase employee engagement. The EVP framework, on the other hand, helped the organization articulate the unique set of benefits and values it offered, making it a more attractive employer in the competitive job market.

  • Assessed and redesigned job roles based on the five core dimensions of the Job Characteristics Model: skill variety, task identity, task significance, autonomy, and feedback, to improve employee satisfaction and retention.
  • Developed a clear and compelling Employee Value Proposition that highlighted the organization’s commitment to sustainability, opportunities for career growth, and a supportive community, which was communicated through various channels to both current and prospective employees.

The adoption of these frameworks significantly improved employee retention rates and overall satisfaction, as roles became more meaningful and aligned with individual and organizational values. The clear articulation of the EVP enhanced the company’s reputation as an employer, attracting higher-quality candidates and reducing turnover among existing staff.

Learn more about Employee Engagement Value Proposition Employee Retention

Sustainable Supply Chain Optimization

In addressing the Sustainable Supply Chain Optimization initiative, the organization implemented the Triple Bottom Line (TBL) framework and the Supply Chain Operations Reference (SCOR) model. The Triple Bottom Line framework, which evaluates performance in three areas: social, environmental, and financial, guided the organization in making decisions that not only benefitted the bottom line but also had a positive impact on society and the environment. The SCOR model, developed by the Supply Chain Council, provided a comprehensive model for evaluating and improving supply chain performance across five dimensions: Plan, Source, Make, Deliver, and Return.

  • Utilized the TBL framework to assess suppliers on their environmental and social practices, in addition to cost, ensuring that only those who met stringent sustainability criteria were selected.
  • Applied the SCOR model to identify inefficiencies and areas for improvement across the supply chain, from planning and sourcing to delivery and returns, with a focus on reducing waste and enhancing sustainability.

The strategic application of the TBL and SCOR frameworks led to a more efficient and sustainable supply chain, reducing costs and enhancing the organization's reputation for environmental responsibility. This not only supported the company’s strategic objectives but also resonated with its eco-conscious customer base, further strengthening its brand position in the market.

Learn more about SCOR Model

Additional Resources Relevant to Employee Retention

Here are additional best practices relevant to Employee Retention from the Flevy Marketplace.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Key Findings and Results

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

  • Online sales increased by 25% year-over-year, attributed to the digital transformation and e-commerce expansion initiatives.
  • Employee retention rates improved by 30%, resulting from the implementation of the Employee Engagement and Retention Program.
  • Supply chain costs were reduced by 15% through the application of the Sustainable Supply Chain Optimization initiative.
  • Market share in the sustainable apparel e-commerce space grew by 10%, driven by unique offerings such as a customizable apparel line and a virtual fitting room feature.
  • Customer engagement rates on the e-commerce platform increased by 40%, following enhancements to the online shopping experience.

The strategic initiatives undertaken by the organization have yielded significant positive outcomes, notably in online sales growth, employee retention, supply chain cost reduction, market share expansion, and customer engagement. The successful increase in online sales and market share can be directly attributed to the effective implementation of the Balanced Scorecard and Blue Ocean Strategy, which not only improved financial metrics but also customer-centric metrics. The substantial improvement in employee retention rates underscores the effectiveness of leveraging the Job Characteristics Model and the Employee Value Proposition framework, making the organization a more attractive employer. However, while supply chain costs were reduced, the 15% reduction may not fully offset the 20% annual increase in material costs, indicating an area where results were subpar. Additionally, the competitive landscape continues to evolve, and the organization must remain vigilant in its digital and operational strategies to sustain growth.

Given the current outcomes and the dynamic nature of the e-commerce landscape, it is recommended that the organization continues to invest in its digital infrastructure, focusing on emerging technologies such as AI and machine learning for further personalization of the shopping experience. Additionally, considering the less-than-expected reduction in supply chain costs, a deeper analysis into alternative sustainable materials and suppliers could provide new opportunities for cost savings and efficiency improvements. Finally, to build on the successful employee retention program, ongoing investment in employee development and engagement initiatives will be crucial to maintaining a motivated and innovative workforce capable of driving future growth.

Source: Global E-Commerce Strategy for Apparel Manufacturing SMB, Flevy Management Insights, 2024

Flevy is the world's largest knowledge base of best practices.

Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.

Read Customer Testimonials

Additional Flevy Management Insights

Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.