Our principle line of business
at BJA is management consulting and the primary objective of our consulting practice is to help management identify
and exploit levers for intelligent or profitable growth. From time to time we are approached by investor groups
who seek insight about the actions management could be taking to create shareholder value. Usually, this kind of work is performed
on a confidential basis without contact or information sharing with management.
information, we typically conduct a DuPont-style financial drivers analysis and a trend analysis of the subject
company and its competitors and benchmark these results against major competitors. Retailers compete in a highly efficient
market and the cost of merchandise, labor and real estate are usually in a narrow range for each retail concept. This
reflects their everyday focus on on cost containment. Nevertheless, we can find obvious cost-cutting or asset efficiency
opportunities - "low hanging fruit" - which we identify.
Of potentially greater significance are
financial margins or asset drivers where competitors are outperforming the company, or where the company's performance has
degraded over time.
This financial analysis is
then combined with “store audits” that we conduct in a representative sample of the subject company’s stores
and web-sites, along with a sample of the key competitors. We use our broad and deep understanding and experience of retailing
to achieve the following:
- Define the de-facto business model in terms of the product and service offering and the effectiveness
of the supply chain and management organization in achieving operational excellence. Upscale specialty or warehouse retail
concept, operational excellence and the actual customer experience will determine the long term financial leverage that is
achieved in the competitive marketplace.
- Evaluate the real estate portfolio management strategy and process by rating the quality and utility
of the store network. Location is always key and a high quality portfolio will only result from a scientific real estate selection
and development process.
- Rank the de-facto customer experience before, during and after a visit to the store against
comparable or competitive retailers. To do this we look at marketing and advertising, multi-channel integration, the store
layout and selling system, the fashion and/or basic assortment, customer service, consumer value added, price management,
visual merchandising and a variety of elements particular to the retail sector.
Putting together the financial and operations analysis we identify those areas where new
best practice, new marketing and merchandising strategies, or higher standards of operational excellence could increase financial
performance. These ideas or management challenges can then be utilized by the investor group to encourage management to make
constructive changes to the management organization, its business processes and its capital structure.