Understanding performance versus market in a complex and changing environment

Executive Summary

  • Multi-year strategic plans need to be reviewed and iterated on regularly when market conditions are changing
  • A clear set of evidence and tested hypotheses, brought together through overarching themes, needs to form the basis of this review
  • Building a view of the near and mid-term future is critical to increasing the life span of strategic plans

The Challenge

We recently carried out a commercial diagnostic for a PE-backed clothing wholesale and retail business. The client were looking to understand their performance versus market so they could develop a multi-year strategic plan. Both their market and operating model had faced significant change which presented difficulty in understanding the root causes of recent performance. The specific challenges included:

Market

  • Shifting Legislation: Changing government guidance on spending limits for a key product segment
  • Cost-of-Living Pressures: Growing price sensitivity among consumers
  • Rising Competition and Second Hand: New entrants intensifying the battle for market share
 

Internal

  • Acquisition-Driven Growth: The wholesale client had acquired retailers, resulting in significant operational complexity being introduced
  • Pricing Uncertainty: Lack of clarity around setting prices and monitoring margins
  • Quality of Service: Extended lead times and shipping costs introduced additional challenges to a service-sensitive customer base

Our approach

To uncover the root causes, we used a hypothesis-driven performance diagnostic. We worked closely with members of the key business functions to collate a series of hypotheses. We then assessed the relative importance of these hypotheses using various techniques:

Market Modelling

  • We built market models for both the retail and wholesale arms of the business to enable us to assess performance relative to market
  • Key variables, such as the rise of second hand and government legislation, were assessed to understand their impact on the current and potential future market
  • Used a combination of competitor research, expert interviews and consumer surveys to calculate triangulation points

 

Internal Analysis

  • We used our analytics expertise to aggregate disparate data systems across all acquisitions, enabling us to understand organic and inorganic performance
  • Analysing sales performance across product and customer segments allowed us to understand the key areas which our client were winning and losing in

 

Competitor Benchmarking

  • We analysed customer sentiment for our client and their competitors to understand how service challenges had changed customer preferences
  • Conducted a price benchmarking exercise to understand the product types and regions where price competitiveness had risen

 

The combination of these methodologies allowed us to formulate a view on our clients performance versus market. More importantly, testing hypotheses meant that the key drivers could be assessed for their strength of impact on the performance.

Impact

Our commercial diagnostic illuminated the precise causes of performance by highlighting both market-driven and internal operational challenges. We equipped our client with a clear view of where critical issues currently lay and where they may arise in the future. This gave our client the clarity needed to develop a multi-year strategic plan.

If you’re interested in understanding your performance drivers in more detail via a commercial MOT, please contact us at contact@datavisionservices.co.uk to see how we can best work together.

"CDD quality work - the most valuable project we have done for years"
Portfolio Company CEO

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