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McKinsey Medium Digital Strategy Business Strategy Market Sizing

Children Clothes E-Retailer

#Retail #E-commerce #Apparel
ProHub Comment

This is a dual-part case combining strategic framework development with quantitative market sizing. Part 1 tests the candidate's ability to structure an ambiguous strategic problem through relevant questioning about customers, competitors, and organizational capabilities. Part 2 tests real-time analytical skills by requiring a back-of-the-envelope calculation with explicit assumptions about market potential and growth trajectory.

Estimated Time 15 minutes
Difficulty Medium
Source Harvard
50 / 100
It’s a Friday afternoon. You’ve just accepted an offer to join our consulting company as a Senior Associate in the Business Strategy Competency. You’ve just called in to confirm your start time on your first day and find out you have an excellent opportunity to be the lead business strategist on a high profile project. We have partnered with a leading bricks-and-mortar children’s apparel retailer to help them analyze, design, and build their Internet strategy. There will be a kick-off meeting for the project with the client (including the client’s CEO) on Monday morning. The Principal/Engagement Leader on this project has asked you to lead a discussion about how the client should think about opportunities on the Internet. Right now, the client only has a marketing and informational presence on the web (a.k.a. “brochureware”). The Principal/ Engagement Leader wants the client to think about the range of opportunities and challenges the Internet presents and whether the client should invest aggressively in pursuing any initiatives.

Clarifying Information

  1. The client is a publicly traded company with a $3B market cap. The share price has risen from $15 to $45 in the past 12 months.
  2. The client has 300 stores, mostly east of the Mississippi, and all stores are within the U.S.
  3. Revenues are approximately $250M, and the firm has average profitability for its industry.
  4. The client has been on a rapid store expansion program adding about 25 new stores each quarter for the past two years. They claim to expect similar growth going forward.
  5. The market for this client is clothing for children 12 and under. Sales are roughly split between boys and girls.
  6. The company is vertically integrated: It designs all its own products, has deep relationships with contract manufacturers in Asia, and distributes all of its products through company owned stores.
  7. The company sells a high quality product that is priced about 25-30% lower than its chief competitors.
  8. The company has done only limited marketing. The brand remains relatively unknown.