Challenge: A PE-backed home décor products manufacturer with a strong position in the value segment and retail channel was becoming bracketed by two major competitors.  One competitor was an up-and-coming, low-priced supplier with an alternative business model and the other was the industry market leader focused on quality and innovation.  Our client needed strategic direction to respond to these competitive forces, as well as understand how to segment customers on a deeper level, which segments to target and why, and which offerings and corresponding value proposition would win in those target segments.

Assessment: Blue Canyon assessed the client’s sales and market data to discover that while some product lines were growing above market rates, the client’s share was under pressure in multiple channels (retailer, online, dealers) across major product categories. Over the past two years, our client had lost 10% share to the low-priced competitor and 12% share to the industry leader in major categories. We also discovered that while our client was holding steady in retail and online, they were losing their already slim share in the dealer channel, which accounted for over 70% of revenue in the total market.

After understanding the economics and customer chains of the market, we conducted in-depth assessments with customers and channel partners to uncover a combination of changing consumer preferences, misalignment on brand positioning, and intense competition as the major factors causing decline in market share. More importantly, our client required a deeper approach to segmenting dealers. Through our in-depth analysis, we were able to identify 5 different dealer segments, ranging from those dealers just starting out and focused on lead generation to experienced dealers focused on wealthy zip codes to larger regional/national chain dealers focused on operational efficiency. After using both housing data and sales data, we sized each of these 5 segments. With the opportunity of each dealer segment understood and knowing our client’s strengths and weaknesses, we were able to develop a focused, data-driven growth strategy.

Strategic Solution: We developed 5 priority growth recommendations aimed to increase share in high growth channels with more prosperous customers, while defending retail and reducing cost-to-serve of smaller customers. For each recommendation, we provided the client with the value proposition, cost impact, and a risk assessment.

Result: The client executive team began implementing the recommended strategy immediately following our engagement, beginning with incorporating our new dealer segmentation into their CRM. Eighteen months after our engagement, the client had recouped 15% market share in major product categories and accelerated growth by 35%, leading the parent PE firm to sell the company at a much earlier date, and a much higher profit, than originally expected.