Retail and Consumer Products Case Studies

Retail and Consumer Products Case Studies

Retail & Consumer Products

April 24, 2015

Our Retail and Consumer Products practice is dedicated to helping companies and their stakeholders at every stage of the corporate lifecycle to prosper in the midst of market changes. We apply our highly developed analytics and expertise to move decisively, and our network of relationships with key industry players keeps us on the cutting edge of industry trends and provides us with unmatched capabilities. We have been engaged by many of the world’s leading retail and consumer companies to provide a wide range of services.

Strategic Assessment

Leading Grocery Retailer
A $6 billion multi-banner grocery retailer with approximately 300 stores throughout the United States was experiencing disparate store performance across demographics and banners. FTI Consulting evaluated strategic options to maximize shareholder value through the execution of potential transactions. Alternative scenarios were defined to reposition the business as a result. We reviewed and segmented the store portfolio based on profitability, productivity and operational performance. The result was a sound asset sale / acquisition strategy and a sustainable operating model to maximize value post transaction(s).

Marketing Performance

Leading Women’s Apparel Retailer
The Limited was experiencing weakening traffic and customer conversion, causing a decline in comparative store sales. Our team analyzed the effectiveness of in-store and direct marketing practices and also assessed the organization and current processes. Activities included insight into traffic improvement opportunities, promotion balancing, offer effectiveness, window and store floor set effectiveness and potential for customer relationship management (“CRM”). The company received a broad set of recommendations with significant cost savings and margin enhancement, as well as a recommended new organization for five key areas across the company. The result was measurable improvement in comparative store sales.

Operations Assessment

Home Goods Retailer
This retail and wholesale company with approximately 450 stores throughout the United States was experiencing multiple years of negative comp sales. Our team reviewed and segmented the store portfolio, analyzed productivity of changes to floor sets, analyzed product and inventory productivity on a relative GMROI basis and determined the effectiveness of pricing and price elasticity. Based on FTI Consulting’s findings, the company began three initiatives, which included use of CRM data to better match customer preferences with merchandising and stores, implementation of a new FTI Consulting proprietary reporting tool to track store inventory performance at a SKU and department level and introduction of a regional merchandise and assortment planning.

Strategic Alternatives

Home Improvement Retailer
Orchard Supply Hardware was left highly leveraged as a result of a recapitalization transaction and dividend payout. Capital investment was inadequate to maintain a viable retail business after the recapitalization. FTI Consulting was retained to evaluate strategic options, including various refinancing and recapitalization alternatives, as well as sale of certain assets or the entire company. Our team developed business plan and supported the sales and due diligence process to advise the board of directors and management on the achievability of various transactions. FTI Consulting, the company’s investment bankers and management successfully sold the business to Lowe’s, a Fortune 50 company. The transaction was honored and recognized as 363 Sale of the Year (over $100 million to $1 billion) by the M&A Advisor Turnaround Awards.

Financial System Optimization

Premier Jewelry Designer
FTI Consulting was engaged by a premier luxury jewelry designer to assist with both business process improvement and finance department transformation. Our team developed critical solutions to improve upon organizational effectiveness in managing the order-to-cash cycle and helped the company increase customer service levels. Working capital management was improved, and inventory levels were reduced through diligent collaborative efforts between FTI Consulting and the company’s management teams. The company ultimately was better positioned to use technology, demonstrated improved process responsiveness through the inclusion of best practices and introduced requisite discipline in key processes. The strategic vision for finance was embraced, and the company is prepared for global expansion.

IPO Readiness

Home Retailer
Restoration Hardware listed its shares on the New York Stock Exchange in November 2012, days after Superstorm Sandy wreaked havoc on the east coast of the United States. FTI Consulting helped the company develop and communicate its messaging platform; drive communications efforts to all key stakeholders, including investors, employees and the media; and execute a positive listing day. FTI Consulting successfully aided the company in outlining its strategic advantages in a market with many challenges. Activities included targeting and messaging advisory services during the IPO preparation process, as well as listing day support. Restoration Hardware traded up 30 percent on its first day of trading, and in the weeks that followed, it continued to command this premium. The company also outsourced its investor relations functions to FTI Consulting following the listing and has continued to leverage the firm’s counsel and support for the investor relations program.

Treasury Solutions

Apparel Retailer
A $1 billion direct-to-market apparel retailer was given 90 days to transfer all its cash management services for operations from a major money center bank after it had switched its credit relations from the bank. Sixty days later, the project had not commenced, and the treasurer resigned. FTI Consulting assumed the role of interim treasurer and worked on an expedited time frame to lead the development and execution of a plan to effectively transfer all cash management services to a new bank in 45 days; coordinate the systemic requirements for the transfer and receipt of information required to effectively manage the cash management cycle; reduce bank service fees by 35 percent; transition trade financing requirements from the old bank to a new service provider; develop a post-transition plan to more efficiently integrate cash management systems and information; and transition the process back to the company. The total time frame was approximately 50 days.


Specialty Office Supplies Retailer
Client wanted an assortment analytics model to transform data into insightful information and to assist its merchants in developing an assortment that meets the preferences of new target customer segments and ensures continued delivery of financial metrics. Our team built an assortment planning tool that combined history from three data sets - transactions, external market share and space planning – and defined a streamlined process to support merchant decision making. Using this historical data, the model recommended an assortment to optimize space productivity. As a result, merchants were able to see the recommended starting assortment, evaluate alternatives, and make edits to achieve their final curated assortment. That recommendation forecasted a 15% increase in sales and incorporated impacts to gross margin from mix shifts, product introductions, new pricing, and improved vendor concessions.

Automotive Aftermarket Retailer And Service Provider
Retailer is a $2B automotive aftermarket service and parts retailer operating retail locations in the US and Puerto Rico. The team from FTI identified $25M in potential annual cost saving from store operations, including task elimination / simplification, payroll optimization, and refinement of management structure at the store level. In partnership with our client, we built and implemented a minimum hour store payroll model and derived a better part-time / full-time mix to reduce store payroll costs. At the end of this phase, the client was able to re-allocate payroll resources resulting in over $13M in annual cost savings.

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