A strategic plan and way forward for a consumer electronics distributor and retailer

The situation

A GCC-based distributor and retailer of consumer electronics was experiencing pressure on its distribution business, and declining margins in its retail business. To combat these problems, management wanted to optimize the operations and cost structure of the distribution business and revamp the retail business. In addition, the company had diversified into enterprise solutions and wanted to grow those services. Strategy& was charged with defining the client’s three-year strategy for the three lines of business, with different mandates for each of them; and assessing the strategy’s impact on the financials and operating model.

How we helped

The Strategy& team began with a detailed baseline assessment of the three lines of business, employing field visits, customer analysis, and capability assessments. For the distribution business, we identified and detailed cost optimization opportunities, including operating model restructuring, portfolio review, and inventory reduction. For the retail business, we analyzed consumer electronics trends and benchmarks, and derived and prioritized improvement opportunities. We then identified potential opportunities to grow the enterprise business, based on industry trends, the country’s vision, and the group’s capabilities and synergies. After consolidating the group’s strategy across lines of business and conducting a detailed assessment of the financial impact, we developed an operating model and enactment plan to execute the strategy.

Results

The group’s management team approved the strategy and set it in motion, anticipating multiple benefits — distribution margins maintained and growing slightly, retail revenues increased by 3 to 4 percent and profit margins improved by a factor of nine, and enterprise business revenues expanded by 15 to 20 percent with a tripling of profit.