Pouring the perfect retail experience
A billion-dollar wine and spirits retailer was facing falling revenues and eroding profitability. Saddled with an antiquated channel strategy, they held on to underperforming brick and mortar locations while neglecting to take advantage of the top-line impact a robust omnichannel infrastructure would provide. Having enjoyed a long run of organic revenue growth from increasing prices and pandemic-driven purchase behaviors, when consumer preferences began to shift, our client was ill-prepared to move at a pace equal to that of the market. They turned to Valorem to help address the mounting pressure from the board to improve profitability and, ultimately, fill the glaring gaps in their growth and sustainment strategy.
We began by helping our client define a holistic omnichannel fulfillment strategy and setting a practical roadmap for achieving key customer experiences integral to the future state including curbside pickup, shipping, and same-day delivery. The immediate focus was on tech modernization and partner selection as there was no existing infrastructure to support anything other than in-store fulfillment. We helped technology teams prioritize work based off criticality and feasibility so that key features could be incrementally brought online in tandem with fulfillment options without disrupting existing online or in-store experiences.
The next step was to define fulfillment strategy. We opted for a partnership approach as delivery and logistics were not core capabilities for our client. We helped our client select partners for both shipping (non-local fulfillment) and same-day delivery. This allowed us to optimize their channel strategy based on service area, increasing fill rate to 100% from a regional average of roughly 85%. By deploying same-day delivery across a network of brick-and-mortar locations, our client was able to bring on-demand delivery to nearly 90% of their customer base and increase same-store fill rate by 10%.
By accelerating an omnichannel fulfillment strategy, our client was able to meet customers where they were and ensure that their digital capabilities matched their physical footprint.
The next step was to define fulfillment strategy. We opted for a partnership approach as delivery and logistics were not core capabilities for our client. We helped our client select partners for both shipping (non-local fulfillment) and same-day delivery. This allowed us to optimize their channel strategy based on service area, increasing fill rate to 100% from a regional average of roughly 85%. By deploying same-day delivery across a network of brick-and-mortar locations, our client was able to bring on-demand delivery to nearly 90% of their customer base and increase same-store fill rate by 10%.
We began by helping our client define a holistic omnichannel fulfillment strategy and setting a practical roadmap for achieving key customer experiences integral to the future state including curbside pickup, shipping, and same-day delivery. The immediate focus was on tech modernization and partner selection as there was no existing infrastructure to support anything other than in-store fulfillment. We helped technology teams prioritize work based off criticality and feasibility so that key features could be incrementally brought online in tandem with fulfillment options without disrupting existing online or in-store experiences.
The new location strategy not only reduced the burden of unprofitable stores, it helped redirect foot traffic, further improving the profitability of otherwise healthy locations. Coupled with robust fulfillment capabilities, our client was also able to increase incremental revenue through its existing customer base and find new avenues for growth by appealing to demographics they weren’t previously reaching.
After an initial pilot period with a number of sample stores, both shipping and same-day delivery were rolled out fleetwide, supported by a redesigned e-commerce experience. Within 6 months same-store online sales had increased an average of 300% and were on pace to add an additional 5% in revenue growth.
Equally important to the top-line growth was the cost structure of our client’s existing operating model. Sales patterns driven by the new fulfillment options helped reinforce which stores had been cannibalizing sales for other, more profitable locations. A detailed analysis of store performance quickly identified over 4% of our client’s fleet were critically underperforming with several being flat-out unprofitable. But the overlay of new channel data allowed us to determine where revenue could be shifted and where it was likely to be lost, allowing us to create a roadmap for store consolidation. We were able to safely consolidate 8% of the fleet, saving our client over $10m in annual operating cost with almost no impact to revenue capture.
5%
Top-line revenue growth
8%
Reduction in store fleet
3x
Increase in same-store online sales
$10m
Reduction in annual operating cost
8%
Reduction in store fleet
3x
Increase in same-store online sales