Mc kinsey on cooperatives the retail coop's guide to industry trends

International Summit
of Cooperatives
The retail coop’s guide
to industry trends

October 2012
Any use of this material without specific permission of McKinsey & Company is strictly prohibited
Copyright © 2012. All rights reserved

Six key trends will redefine the retail sector over the next decade
Retailers will provide a seamless multichannel customer
The “all-channel” experience and differentiate themselves by having a clear value
1
experience proposition

Strategies and Retailers will invest in advanced analytical capabilities to
2 operations driven by improve customer segmentation and strategic positioning
big data

The consumer revolution currently underway will move power
3 Power to the people away from retailers

Growth will be strong and sustained in emerging markets, and
Growth in emerging these markets will represent a much larger share of the world’s
4
markets retail revenue

Pressure on margins Stagnant growth and a highly competitive environment will put
and capital productivity pressure on retailers’ margins and force them to cut costs
5
in developed
economies
Retailers will face higher volatility of input costs and of the
6 Volatility in input costs economic and political environments in which they operate

McKinsey & Company
| 1

Five key questions arise for cooperative retailers

1 How can coops keep their physical store networks relevant?

2 How can coops maintain an edge in customer satisfaction?

3 How can coops use the internet and social media to improve member relations?

4 How will coops grow?

5 Are there opportunities for alliances among non-competing cooperatives?

McKinsey & Company
| 2

Contents

Overview of key trends

Detailed questions for coop retailers

McKinsey & Company
| 3

1 Customers will demand a seamless multichannel experience – the
“all-channel” experience
Context Implications
The “all-channel”
1 ▪ The online channel is growing and ▪ The boundary between brick-and-
experience
becoming increasingly important in mortar and online stores is blurring
driving offline sales – Multichannel integration has the
Strategies and – In fact, consumers highly value the potential to bridge the growing gap
2 operations driven by ability to use multiple channels between the physical and the
big data throughout the shopping virtual world
experience ▪ Physical stores must differentiate
▪ Retailers are adopting new themselves by offering distinctive
technologies to support or work value to customers
3 Power to the people
alongside store associates ▪ Big-box stores, in particular, have
– For example: in-store kiosks, an advantage in distribution
mobile devices, and tablets compared to their smaller rivals,
Growth in emerging ▪ Many product and service including coops
4
markets categories are moving more clearly
into the digital battleground, and
online research is rapidly becoming a
Pressure on margins key trigger in the customer journey
and capital
5
productivity in
– For example: clothing, footwear,
furniture, and home improvement
developed economies
are moving into the digital
battleground
Volatility in input
6
costs

McKinsey & Company
| 4

1 The online channel is growing and becoming Online sales
increasingly important in driving offline sales Online-influenced sales
Offline sales not influenced
by online presence

Total US retail sales CAGR 2006-2011
USD Billions, percentage of total Percent

3.053 +3
2.886 2.968
2.728 2.806
2.616 2.648 14 16 +15
2.500 11 13
2.370 2.407 8 9 10
6 7
6
16 20 25 33 33 36 40 45 50 56 +21

78 74 68 59 58 54 49 42 36
28 -5

2006 2007 2008 2009 2010 2011 20121 20131 20141 20151

1 Assumes that online sales and online-influenced sales will increase at the rate of 15% per year and that total sales will increase at their historical rate
of 3% per year

McKinsey & Company
SOURCE: Forrester; McKinsey analysis | 5

1 Consumers highly value the ability to use multiple Not important
channels throughout the shopping experience Somewhat important
Important or extremely
important

Importance of multichannel functions among survey participants

Percentage of respondents; N = 3,738 Percent using
service Importance to those using service

Check online to see if the store has
69 15 32 54
a certain item available

Print coupons online, use them in a store 62 17 32 51

Buy online, but pick up in the store 43 23 36 41

Buy online and return the item to the store 29 14 24 62

Access enhanced online content for
28 23 35 41
product research, purchase in store
Use an online website to customize
15 41 27 32
the products they buy

Book in-store appointments online 11 38 33 29

100%

McKinsey & Company
SOURCE: iConsumer 2011 - RT16bb | 6

1 Retailers are adopting technologies ranging from in-store kiosks to
mobile devices and tablets for store associates

In-store kiosks for consumers to order Mobile devices and tablets for store associates to
items or sizes online when not available access customer purchase history, create outfits,
in the store checkout, etc.

Quick Response code tags that consumers can scan to
obtain more product information

McKinsey & Company
SOURCE: CBRE Econometric Advisors; Internet Retailer | 7

1 Many product and service categories are moving more clearly into the
digital battleground, and online research is rapidly gaining in importance
2010
Research online 2009
Percentage of respondents
75
70
Moved
65 to digital Computer
Electronics hardware/
60
software
55
50
Videogames
45 Furniture
40 Home
improvement
35
30 Still in Home Books
stores decor
25 DVD/videos
Footwear
20
Office supplies Clothing
15 HBA
Household Digital
10 products battleground
5 Grocery
0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80
Purchased online1
1 As a percentage of those who bought a product in the respective category in the past 6 months Percentage of respondents

McKinsey & Company
SOURCE: iConsumer | 8

1 As a result, the boundary between brick-and-mortar and online stores
is blurring
Tesco’s virtual store in Korean subway Adidas’ virtual footwear wall

▪ In August 2011, Tesco started testing a virtual store in ▪ In collaboration with Intel, Adidas developed adiVerse,
the subway in Seoul, South Korea. Commuters can a virtual footwear wall
shop on the go using their smartphones – Customers can access expanded online inventory
– Using Tesco’s local Homeplus banner app, – They can view each item in 3D and rotate it to any
commuters can scan barcodes of 500+ popular angle, zoom it, get more product information (price,
products, and the app will automatically order them customer reviews, etc.), and make a purchase
– Orders placed before 1 pm are delivered to homes – Built-in anonymous video analytics provide metrics
the same evening on shopper trends and shopping patterns, enabling
Adidas to provide a more personalized experience

McKinsey & Company
SOURCE: Press search | 9

2 Retailers will invest in advanced analytical capabilities to identify and
capture value
1 ▪ During the next decade, businesses ▪ Consumers now seek specific,
experience
will leverage the growth of available tailored items that online retailers
data and computational capacity to have the ability to deliver
inform strategy and influence – Customers are increasingly
Strategies and operations expecting such low-volume niche
2 operations driven by – Data is available for analysis in all products
big data key functions, such as – The long tail of the product mix is
merchandising, marketing, supply becoming more accessible to
chain, and human resources retailers
3 Power to the people – Some retailers have already used ▪ Demand for deep analytical talent
big data to create a significant in the United States could exceed
competitive advantage for supply by ~50% in the next few
themselves; for example, Tesco years
Growth in emerging leverages shopper and loyalty
4 data to better target, market, and – The market has a general
markets
price products shortage of qualified statisticians
and data analysts
Pressure on margins
and capital
5
productivity in
developed economies

Volatility in input
6
costs

McKinsey & Company
| 10

2 During the next decade, businesses will leverage the explosive growth
of available data and of computational capacity

Data generated worldwide Computational capacity of the world’s fastest computers
Exabytes (= 1 billion gigabytes) FLOPS,1 2 log scale
35,000 16
All the information stored inside the
US Library of Congress amounts to 1E+19 Today’s fastest computers are
< 0.00025 exabytes 1E+17 more than 10 trillion times
1E+15 faster than those of 1960
1E+13
1E+11
7,900 1E+9
1,300 1E+7
50 110
1E+5
2000 2005 2010 2015 2020 1960 1970 1980 1990 2000 2010

Available data will be characterized by its scale, distribution, diversity, and timeliness

▪ Scale: data sets will be massive, > 1 multipetabyte (1 million gigabytes) in size, and built to be easily
scaled up
▪ Distribution: data will come from and be distributed both within and outside the organization
▪ Diversity: data will be semi-structured, unstructured, or a combination of different types
▪ Timeliness: data will be captured and analyzed in real time, allowing for immediate response

1 Floating-point operations per second
2 Rmax FLOPS

SOURCE: IDC Digital universe study 2011 and 2010; Hilbert and López, “The world’s technological capacity to store, communicate, McKinsey & Company
and compute information,” Science, 2011; www.vetta.org; McKinsey analysis; McKinsey Global Institute
| 11

2 Consumers now seek specific, tailored items that online retailers have
the ability to deliver

Mass The long tail: low-volume The long tail of the product mix is
products niche products becoming more accessible
▪ The long tail refers to the large
portion of products that have
little mass appeal
▪ The reduced overhead costs of
online retailers allow them to carry
more niche products than
traditional stores
Popularity

– Amazon.com currently offers
a selection of more than 35
million books, whereas brick-
and-mortar stores are limited
to ~100,000 books
▪ Consequently, customers are
increasingly expecting that
products on the long tail will be
available and are demanding such
products
Products

McKinsey & Company
| 12

2 In the next few years, demand for deep analytical talent in the United
States could exceed supply by ~50%

Supply and demand of deep analytical talent by 2018
Thousands of people
140-190 440-490

180 30
300

~50% gap
150 relative to
2018
supply

2008 Graduates Other1 2018 Talent 2018
employment with deep supply gap projected
analytical demand
talent

1 Other supply drivers include attrition (-), immigration (+), and reemploying previously unemployed deep analytical talent (+)

McKinsey & Company
SOURCE: US Bureau of Labor Statistics; US Census; Dun & Bradstreet; interviews; McKinsey Global Institute analysis | 13

3 The retail sector is undergoing a consumer revolution that will move
power away from retailers
1
experience ▪ Consumers are gaining in ▪ Consumers are leveraging the
bargaining power as they capabilities of their smartphones to
increasingly visit retailers’ websites get product information and
Strategies and before making purchases shopping aid on the go – for
2 operations driven by ▪ Consumers increasingly trust and example, using smartphones to scan
big data use social media and community barcodes in brick-and-mortar stores,
input such as other users on retail consumers instantly receive relevant
websites, site-generated information
recommendations, and user- ▪ Transparency of information
3 Power to the people generated product reviews creates purer competition, which
▪ Mobile research puts information means retailers must explore
on product features capabilities to respond with more
and prices at consumers’ agility and create distinctive
Growth in emerging fingertips, even within stores offerings that competitors are unable
4 to match
markets

Pressure on margins
and capital
5
productivity in
developed economies

Volatility in input
6
costs

McKinsey & Company
| 14

US EXAMPLE
3 Consumers are gaining in bargaining power as they
increasingly visit retailers’ websites before making purchases

Consumers visiting a retailer’s website before purchasing in its store
Percent
2009 2010 Difference
Electronics (e.g., TV, digital
49 67 18
camera, gaming console)

Footwear 32 44 12

Office supplies 20 41 21

Books 19 58 39

Clothing (not
14 35 21
including footwear)

Health and beauty products 9 38 29

Grocery (e.g., food) 6 34 27

McKinsey & Company
SOURCE: iConsumer retail survey, November 2010; US Internet users aged 13 years and older | 15

3 Today, consumers increasingly trust and use social media and
community input

Recommendations that consumers trust Consumer recommendation rate
Consumers that trust, or somewhat trust, reviews1 Consumers leaving comments or
Percent, N = 3,738 recommendations1
Percent, N > 3,7382
Other users on
57 21 20
retail websites
18
Site-generated
47
recommendations

User-generated
42
product reviews

Recommendations
37
generated from SNS3

User-generated videos 31
2009 2010 2011

1 As a share of all respondents
2 N = 3,738 (2011), 3,970 (2010), 4,168 (2009)
3 Social networking service

McKinsey & Company
SOURCE: iConsumer 2011 – RT9L, RT9K | 16

3 Because mobile research puts information on product features
and prices at consumers’ fingertips, even within stores… US EXAMPLE

Place of mobile research Mobile activity penetration

Percentage of respondents using Share of population in any category 2010 2011
mobile research, N = 853 (2011) N = 375 (2011)
28
Visited same store website
43
At home 78 32
Visited different store website 40
37
Used price comparison app
38
33
In store 44 Texted
26
17
Used mobile coupon
25
Increase 15
from 33% Scanned barcode 17
Other 26 in 2010
18
Took photo of product
16

McKinsey & Company
SOURCE: iConsumer 2011 | 17

3 …consumers are leveraging the capabilities of their smartphones to
get product information and shopping aid on the go

Mobile devices are enabling consumers to Consumers are leveraging mobile tools to
compare prices when they are in stores support offline shopping

▪ Apps such as
GroceryIQ help
consumers organize
RedLaser shopping lists and
▪ Using smartphones to scan barcodes in prioritize needs
brick-and-mortar stores, consumers ▪ Barcode scanning
instantly receive relevant information allows users to quickly
▪ Consumers can compare online and offline add items they are
inventory, pricing, and time-to-delivery/ running out of or
distance remove items
purchased from lists

McKinsey & Company
SOURCE: Gartner; press searches; RedLaser; GroceryIQ | 18

4 Growth will be strong and sustained in emerging markets, which will
represent a much larger share of the world’s retail revenue
1 ▪ Emerging markets will continue to ▪ More than half of the growth in
experience
drive retail growth in the next global retail revenue will come
decade from emerging markets during the
– While retail markets are next decade
Strategies and
2 operations driven by stagnating or growing very slowly – China and other emerging
big data in most developed countries, markets will account for 31% of
emerging markets are showing the world’s retail sales in 2020, up
growth in excess of 5% per from 25% in 2010
annum – Emerging markets will account for
3 Power to the people
– The fastest growth will be in more than half of the absolute
Southeast Asia growth in retail sales worldwide in
▪ Emerging markets will add more the next decade
than 160 million middle-class
Growth in emerging households by 2020
4
markets
– GDP growth will be twice as fast
in emerging countries as in
developed economies
Pressure on margins
and capital – The growing middle class will
5
productivity in rapidly drive up internal
developed economies consumption

Volatility in input
6
costs

McKinsey & Company
| 19

4 Emerging markets will continue to drive retail growth in the next
decade
Real retail revenue CAGR for 2011-2020, by country, percent 0 3.5-4.0 > 5.0
0-3.5 4.0-5.0 No data

▪ All the fast-
growing retail
markets are in
the emerging
world
▪ In particular,
most Southeast
Asian countries
will experience
phenomenal
growth of over
5% per year
during the next
decade
▪ Most developed
markets will
experience
relatively
sluggish growth

McKinsey & Company
SOURCE: Global Insights World Industry Service | 20

4 Emerging markets will grow more than twice as fast Emerging countries

as developed economies and add more than Developed countries

160 million middle-class households by 2020
Equivalent
annual real
Evolution of world real GDP growth from Evolution of households income
by region 2010 to 2020 distribution in emerging markets1
Real 2005 USD Trillions Percent Millions of households

▪ There will be more
19.3 70.5 1,206 than 160 million
11.1 1,085 new middle-class
Household
306 households in
26.2 5.7% income 139
51.2 8.2 emerging
≥ USD 25,000
countries, which is
15.1 more than the
current total
number of house-
Household
holds in the US
income 945 900
44.3 2.1% < USD 25,000 ▪ This rising middle
36.1 class will rapidly
drive up internal
consumption

2010 2010-2020 2020 2011 2020
growth

Note: Numbers may not sum to total due to rounding
1 Income categories defined per annual income in USD PPP

McKinsey & Company
SOURCE: IHS Global Insight; Global Insight; McKinsey analysis | 21

4 As a result, more than half of the growth in global retail revenue will
come from emerging markets during the next decade

Retail total sales Origin of the absolute change in retail sales
USD Trillions, 2010-2020 Percent, 2010-2020
Percent
100% = 3.2 4.2 China
China 3 5 US 12
Other emerging 22 23
26

Other developed1 16
15

Western Europe 31 Western 12
26 Europe 40
Other
emerging
12
US 28 27 Other
developed
2010 2020

1 Includes Australia, Canada, Japan, New Zealand, and South Korea

McKinsey & Company
SOURCE: Global Insights World Industry Service | 22

5 Stagnant growth and a highly competitive environment will put
pressure on retailers’ margins and force them to cut costs
1
experience ▪ To achieve significant cost ▪ Since the crisis, retailers are
savings, retailers are turning to moving toward smaller store
technology such as mobile points of formats, with major retailers reducing
Strategies and sale, electronic shelf labels, and their average store sizes by up to
2 operations driven by planograms, all of which can reduce 50% in some cases
big data costs while improving the customer ▪ Some retailers are experimenting with
experience or increasing flexibility for store formats
retailers
– Smallbox stores are used to
▪ Retail operations are transformed expand in urban areas where
3 Power to the people through massive improvements in larger footprints are difficult or
the handling and tracking of goods expensive to install
by both retailers and consumers
– Online supporter locations and
– Retailers can improve their pop-ups allow retailers to add
Growth in emerging operational efficiency by using
4 capacity quickly while using
markets RFID1 and similar signal alternative or temporary
technologies distribution channels
– Embedding signal technology for – Market research centres are
Pressure on margins all items in a retail store will
and capital used to test new formats and
5 improve the customer experience examine retail behaviours
productivity in and avoid missed sales because
developed economies items can’t be located within the
store (e.g., misplaced clothing
Volatility in input items at Bloomingdale’s)
6
costs

McKinsey & Company
1 Radio frequency identification | 23

Low
5 To achieve significant cost savings, retailers are turning to Medium
technology High

Examples of new technologies with cost-saving potential
Cost-saving
Technology Description Benefits potential
Mobile points of Handheld POS in the store Breaks bottleneck at checkout at
sale to supplement checkout busiest times, in a cost-effective
stations way

Electronic Programmable wireless No manual price changes
shelf label devices on store shelves necessary, increased pricing
flexibility

Software for product Increased sales and profits, fewer
Planograms
placement on store shelves stockouts, and decreased
administrative and labour costs

McKinsey & Company
| 24

5 Retail operations are transformed through massive improvements in
the handling and tracking of goods by both retailers and consumers
Using RFID and similar signal technologies, Embedding signal technology for all items in
retailers can improve their operational a retail store will improve the customer
efficiency experience

▪ Retailers can optimize inventory ▪ Apparel retailers, where goods are easily
management and automate the purchasing misplaced, are using RFID to locate and count
process using RFID to track all incoming and goods in stores
outgoing stock ▪ Bloomingdale’s recently implemented RFID
▪ Walmart pioneered RFID in inventory, leading tags for individual items, improving stock
to an estimated ~USD 290 million in savings accuracy and location for customers

McKinsey & Company
SOURCE: PCWorld; RFID Journal | 25

5 Since the crisis, retailers are moving away from large 2008
store formats 2011

Average new store size 2011 vs. 2008
Thousands of square feet Percent
49 -12
43
134
-3
130

162
-6
152

33
16 -51

168
131 -22

68
-17
56
166
111 -33

McKinsey & Company
SOURCE: CBRE Econometric Advisors; Internet Retailer | 26

5 Retailers are experimenting with new and innovative store formats and
concepts in test markets to address pressure on margins
Emerging store Example
format category companies Selected examples
▪ Tesco and Walmart use smaller formats to expand into more
urban markets where real estate is limited or at a premium
– Tesco launched Fresh & Easy Express in November 2011,
with stores one third the size of normal formats
Smallbox
– Walmart Express stores, launched in 2011, are already
profitable and are being deployed in dense, as well as
in smaller, markets

▪ Walmart temporarily opened pop-up stores during the 2011
holiday season to direct consumer traffic to its website
Online ▪ In-store goods used for display purposes for customers
supporter to purchase items online
▪ Customers can access the website in the store through
tablets and PCs to make purchases

▪ Nordstrom launched Treasure & Bond in August 2011 and
currently has one location in Manhattan
Market ▪ The store is much smaller than traditional Nordstrom stores
research and offers different products
centres ▪ The store is used to gain market insights on the shopping
habits of the population. Profits from the store are donated
to local charities

McKinsey & Company
SOURCE: Reuters; Los Angeles Times; New York Times | 27

6 Retailers will face higher volatility from their input costs and from the
economic and political environments in which they operate
1
experience ▪ Recent spikes in food prices reflect ▪ Retailers now must understand the
the volatility of costs that retailers risks to which they are exposed
face ▪ Cooperatives are equally exposed
Strategies and – The food price spike and to many of these risks as their
2 operations driven by economic downturn reversed a traditional competitors
big data historical trend of decreasing
poverty and hunger prior to 2008, ▪ Retailers must take action to mitigate
with 925 million still hungry in these risks, including ensuring that
2010 they have suitable risk
3 Power to the people measurement and management
▪ Some factors that contributed to the capabilities, especially in
crises are still relevant, for example – Finance
– Slowing growth in agricultural – Contracting
production
Growth in emerging – Operations
4 – Population growth and rising meat
markets – Strategy
consumption
– Mandates incentivizing biofuel
Pressure on margins production
and capital – Rising crude oil price
5
productivity in – Adverse weather
developed economies – Export restrictions
– Civil strife

Volatility in input
6
costs

McKinsey & Company
| 28

6 Recent spikes in food prices reflect the volatility of costs that retailers
must face
Food price index
2003-2004 = 100

240 The food price spike and Factors that
economic downturn contributed to the
reversed a historical trend crises and that are
200 of decreasing poverty and still relevant
hunger prior to 2008, with ▪ Slowing growth in
925 million still hungry agricultural
160 by 2010 production
▪ Population growth
and rising meat
120 consumption
▪ Mandates
incentivizing
80
biofuel production
2nd peak in February 2011
pushed > 45 million
▪ Rising crude oil
40 price
people into extreme
poverty ▪ Adverse weather
▪ Export restrictions
0
90 95 00 05 10 ▪ Civil strife

SOURCE: Food and Agriculture Organization of the United Nations food-price index; Ronald Trostle, US Department
McKinsey & Company
of Agriculture; Peter Timmer, Agriculture and Pro-Poor Growth: An Asian Perspective, Centre for | 29
Global Development Working Paper No. 63, July 2005; World Bank Copyright © 2012. All rights reserved

To mitigate risks associated with high volatility, retailers can use a variety
of levers beyond traditional financial instruments

Strategic
▪ Integrate vertically
Operational/ to balance buy-
merchandising side/sell-side
▪ Develop alternative ▪ Develop
product partnerships
Contracting (sales formulations/
and purchasing) ▪ Invest in pure
wider specifications plays or counter-
▪ Align purchasing ▪ Redesign products cyclical
and sales
Financial ▪ Use substitutes businesses
contracts in
▪ Leverage traditional timing/terms ▪ Optimize pack size/
financial price/quality across
instruments ▪ Use escalator
clauses and/or channels/
▪ Seek structured formula pricing geography
products ▪ Optimize go-to-
market strategies
▪ Optimize trade
spend/marketing
dollars

McKinsey & Company
| 30

Contents

Overview of key trends

Detailed questions for coop retailers

McKinsey & Company
| 31

1 How can coops keep their physical store networks relevant?

Context Questions to ponder
▪ The advent of How can the geographical proximity of your physical network still give you a
e-commerce makes significant advantage as social and business interactions go virtual? How can you build
consumers less A
stronger relationships with your customers and the communities you serve to improve loyalty?
likely to visit brick- How can the physical network differentiate your offer and better engage your members?
and-mortar stores
How can you provide a distinct and significant reason for the customer to enter your
▪ Physical networks physical store (e.g., expertise or convenience)? How can you maximize your multichannel
of stores have B
strategy to provide interaction between online, mobile, and your physical network of retail
become less
stores?
central to the
customer
relationship Should the role of the network evolve to preserve the traditional advantage of
geographical proximity while remaining profitable? How can your network be made less
C
▪ Coops are dispro- costly? How can you leverage your network by adding new services needed by your
portionately members? Which new member needs are you best able to serve?
affected because of
their unusually How can you use local knowledge and managers’ entrepreneurial nature to optimize
large network store formats offered in different communities? How much flexibility should store
D managers and local staff have to experiment with store formats based on their knowledge of
▪ The links to the the local market? How can you effectively disseminate the information on optimal formats
community on throughout your network?
which coops have
historically relied
How can you make product offering a point of differentiation through physical stores?
are disappearing
How can you source more products locally, and will this please your customer base? How
E
can you use knowledge of local tastes and preferences to tailor offerings on a store-by-store
basis? What advantages do you have to tailor product assortment to local preferences?

McKinsey & Company
| 32

2 How can coops maintain an edge in customer satisfaction?

▪ Historically, coop What key elements do your customers truly care about and consider when deciding
retailers tend to where to shop? How are you stronger or weaker than your competitors on these dimensions?
A
prioritize customer What elements would be easiest to improve upon in your cooperative – and would they make a
service significant difference?

▪ By leveraging What investments could ensure that customers feel that there is something distinctly
technology, different about shopping in your cooperative? Do customers feel that their input is valued
competition and that they help shape the direction of your cooperative? For consumer coops, how much do
integrates a multi- B your members feel like owners? How can you create an atmosphere where consumers feel
channel approach more important than in your competitors’ stores? How can you play a leading role in protecting
to satisfy and promoting customer rights and interests (e.g., by ensuring the quality of all your products
customers meets certain standards, by always being transparent and fair in your offering to members)?

Where are competitors cutting or lacking in customer service? Where are there
▪ Thus, coops need C opportunities for you to fill gaps your competitors leave and to attract consumers on that
to redefine their
platform, while at the same time fulfilling your cooperative mission?
customer
experience to What should be the general guiding strategy to improve customer satisfaction in an
remain relevant environment in which costs need to be cut and operations need to be more efficient?
and competitive in D To what extent can you improve customer service by harnessing technology, big data, and the
the market transformation to multichannel, while also controlling costs? Will you require more labour and
will the current workforce need more training, or will you need to have a leaner labour force?

Given the resources available, what specific investments and initiatives should you
prioritize to satisfy customer needs? How can you strike the appropriate balance between
E dimensions of service that are most feasible and economical and those that customers
appreciate the most, and between initiatives that will yield more tangible payoffs in the short
term and those that offer more delayed benefits?

McKinsey & Company
| 33

3 How can coops use the internet and social media to improve member
relations?
▪ Coops traditionally How will the “virtualization” of business and social interactions affect cooperatives’
relied on physical traditional proximity advantage and how should your coop adjust? As customers spend
presence to engage A more time online and as attachment with their local communities is weakening, how will you still
with members be able to engage them via your branch network? What novel ways can you use to engage
members?
▪ Now, the internet
and social media
are connecting How can you harness the power of new online media and the internet to deepen
communities of all B relationships with your customers and better understand their needs? How can you
kinds engage customers online to know them better and to elicit their input?

▪ Increasingly, How can you use new media and the internet to revitalize the democratic dimension of
members are
your governance structure? How can you allow members to vote and engage in the
expecting their
C democratic process over the internet? How can you leverage social media to energize an
coop to connect
already open communication channel with members (e.g., let a special committee interact via
with them virtually
social media)?

Should you review and redesign your organizational structure to better adapt to the
virtualization of interactions? Is your decentralized structure revolving around local branches
D
still optimal? Should you consider structures in which members interact directly with the broader
cooperative and not via their branch?

McKinsey & Company
| 34

4 How will coops grow?

▪ Growth plays a How is growth essential to a cooperative’s business model, or how can it be successful
different role in without continued growth? How is continuous growth necessary (or not) for you to remain
A
coops than in relevant and to fulfill your mission to members? What are the implications of a no-growth
traditional business for your members?
corporations
Should you look for growth opportunities outside your domestic market (e.g., emerging
▪ Today, some markets)? How do your members stand to benefit from the growth in emerging markets? How
markets are B could your cooperative suffer competitively in its home market in the future if it does not expand
saturated and some abroad (e.g., through lack of scale)? How difficult would it be to seize growth opportunities in
environments are emerging markets?
recessionary
How can you add new products or services to the retail offering? To what extent are there
▪ What will be the growth opportunities through new products that would complement the current mix? How can
C
next development you add unrelated products in which your customers have gained an interest? How would such
path for coops in a move affect your image and position in your traditional market?
that context?
How can your cooperative grow by filling some of the gaps left by the shrinking of the
welfare state? How can you leverage your brand, your physical network, and your financial
D resources to grow in some of the areas left unoccupied by the withdrawing welfare state? How
can your cooperative build the credibility and the capabilities to fill some of the gaps? How
would these new ventures benefit your members and affect your positioning?

Why should you focus (or not) on taking market shares from competitors in the
domestic market to fuel growth? How can you build a platform to gain market shares from
E the competition (e.g., better customer service)? How competitive is the landscape – are your
competitors likely to retaliate and attempt to attract your customer base, or is their attention
focused elsewhere?

McKinsey & Company
| 35

5 Are there opportunities for alliances among non-competing
cooperatives?

▪ Retail cooperatives What are the most promising areas for collaboration with other non-competing
face larger, more A
cooperatives, both in retailing (in other regions) and in other sectors? How can you form
powerful alliances to pool purchasing power or to develop private labels? How can you form a joint private
competitors label that would be more cost-effective and create a stronger brand? How can synergies be
exploited to optimize international supply chain logistics? How can you establish cooperative
▪ Larger competitors academies to jointly train workers? How can you exploit M&A opportunities in core and adjacent
enjoy economies businesses (e.g., discount, pharma, travel)? How can you undertake joint ventures with other co-
of scale that are ops to tackle a new market or a new product?
not attainable by
coops
B How can you create a forum with other cooperatives to discuss the challenges you face,
▪ Alliances and joint identify best practices, and educate policymakers? How could you work together to help
ventures offer the improve your public image and make policymakers more aware of the unique aspects of your
potential to access model? How can you initiate a benchmarking effort across cooperatives to identify and share
the benefits of size best practices?

C What are the main obstacles to collaboration and how can they be overcome? What has
prevented you from collaborating more with other cooperatives until now? What steps could
you take to overcome these obstacles? How favourable are your members to the possibility of
joining forces with other coops?

D What strategic next steps should leaders take in the short term to help foster
collaboration between cooperatives? Which non-competing cooperatives should you contact
to jointly explore possible avenues for collaboration?

McKinsey & Company
| 36

Mc kinsey on cooperatives the retail coop's guide to industry trends

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (19)

En vedette

En vedette (8)

Similaire à Mc kinsey on cooperatives the retail coop's guide to industry trends

Similaire à Mc kinsey on cooperatives the retail coop's guide to industry trends (20)

Plus de InformaEuropa

Plus de InformaEuropa (20)

Mc kinsey on cooperatives the retail coop's guide to industry trends