Clarks taps McKinsey consultants to review its strategy
UK footwear retailer Clarks has appointed McKinsey & Company to conduct a review of its business, having endured a difficult period in the UK market. According to Clarks, McKinsey will work on a strategy of “renewing the relevance” of its brand to consumers.
Around the world, the retail sector is experiencing a number of major headwinds. The UK high street looks set to end the decade on a low note, seeing its highest level of store closures in nine years. Averaging 16 closures per day, the UK saw a net loss of over 100 more stores than in the same period of 2018 alone, with worse expected to come for the sector as Brexit looms on the horizon.
McKinsey & Company has been consistently looking to promote innovation in the sector, in order to revive retailers in the UK and overseas. In a bid to understand why retailers are suffering such adverse conditions – and what they can do to survive them – the consulting firm even opened a retail store selling underwear, make-up and jewellery to customers in a US shopping mall. The MBB strategy firm opened the tech-enhanced store in the Mall of America in order to test various retail technologies and collect valuable consumer data.
Now, for its latest foray into the retail world, UK footwear specialist Clarks has appointed McKinsey to review its business. The news comes after Clarks saw UK and return-on-investment sales plummet by £37.6 million for the year ending February 2019, sinking to £561.1 million. Tough trading conditions also led to a loss after tax of £82.9 million for the year, more than double its 2018 loss of £31.3 million.
As Clarks looks to turn its ailing fortunes around, the retailer already has a five-year store rationalisation plan in place, including three key actions to stabilise the company. These are: reducing the cost base; arresting decline; and bringing profitability to 2019/20. Meanwhile, the company is looking to expand its business in the Asia Pacific region and US wholesale, and to decrease its presence in the US, Europe and the UK.
A spokesperson for Clarks told the press, “The last few years have been challenging, but despite that Clarks is on track to grow underlying profitability this year. As part of this work, Clarks has appointed McKinsey & Company to support the strategy of renewing the relevance of our brand to consumers and our partners… We are transforming the brand to reconnect with our consumers by designing iconic new products and launching an exciting new brand and marketing strategy that will engage consumers across the world.”
