RETAILING

the complicated mix of products, service, locations, store format, operations, and brand image that makes a retailer unique has been halved over the past 25 years. Concepts born in the 1970s, such as the specialty clothing store Merry-Go-Round, had an average run of 15 or 16 years before earnings growth slowed signicantly. Younger formats will probably last only four or ve years before growth slows (Exhibit 1). Several developments are shortening life cycles. Consumers have become more sophisticated and tend to shop around for value, while retailers have improved information systems to recognize and respond faster to shits in consumers needs. Overall competitive intensity has increased, especially in the United States and the United Kingdom. As formats mature, retailers need to act quickly. Once a retail concept starts to decline, its nancial performance can tumble rapidly, making recovery increasingly dicult. A recent study of established retailers with three consecutive years of negative earnings growth found that almost half went bankrupt and most of the others took at least another four years to recover (Exhibit 2). To avoid this fate, retailers must become expert at concept renewal. They must also expect to renew frequently even, as the best of them do, continuously.

HE LIFE OF A TYPICAL RETAIL CONCEPT

Kathryn Bye Burns is a consultant in McKinseys Washington, DC oce; Helene Enright is a consultant in the New Jersey oce; Julie Falstad Hayes is a consultant in the Chicago oce; Kathleen McLaughlin is a consultant in the Toronto oce; and Christiana Shi is a principal in the Los Angeles oce. Copyright 1997 McKinsey & Company. All rights reserved.

Kathryn Bye Burns, Helene Enright, Julie Falstad Hayes, Kathleen McLaughlin, and Christiana Shi

The average life of a retail concept is becoming shorter Renewal requires blending analysis with conscious creativity Continuous renewal is at the heart of successful retailing

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Exhibit 1

Shortening retail life cycles

Representative life cycle curves*
70

How to make renewal successful

Successful retailers view renewal as a signicant undertaking that difers in several ways from performance improvement or new concept development. To start with, it does not mean executing the existing concept more efectively, but rather repositioning the idea to address shits in customer needs. It will
Exhibit 2

Earnings growth rate

60 3 year CAGR, % 50

198690 198185 197680

40 196575 30 20 10 0 0 2 4 6 8 10 12 14 16 18

Number of years after reaching $100 million in sales

* Based on analysis of the 15 largest single-concept retailers that reached $100 million in sales in each period; curves are smoothed Source: Compustat; McKinsey analysis

The difficulty of recovery

33 retailers recovering from earnings collapse* 15 Went bankrupt/ did not recover 7 03 years to recover 8 45 years to recover 3 >5 years

* Defined as returning to precollapse earnings levels after 3 consecutive years of negative earnings growth Source: Compustat; McKinsey analysis

probably alter the customer base by, for example, focusing on serving the 15 percent of customers who account for 30 percent of revenue under the existing concept so that they account for 70 percent under the new concept. Renewal is also likely to involve asset changes. A retailer might nd some of its stores do not work with the new concept; some might need to be closed while others are remodeled. And line managers might have to be moved from their jobs. In three of the cases we studied, up to a third of store managers and more than half of senior managers were replaced (Exhibit 3).
Exhibit 3

Management changes during renewal

Percent of management changed Smart & Final Top team District managers Store managers 33 75 100 20 General merchandiser 70 60 33 Lowes 70* 80 20 20 Specialty retailer 80

* Includes departmental and merchandising VPs 58% from outside Regional VPs Source: Interviews; annual reports

At the same time, renewers do not have the freedom that comes with developing a concept from nothing; they have to start with an existing brand,

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customer group, asset base, and frontline salesforce and somehow transform them. Yet despite the complexities of renewal, a number of retailers have managed it. One recent sample of successful renewers generated an average return on capital invested of 25 percent (Exhibit 4).

Exhibit 4

The benefits of renewal

Average return on invested capital
Percent 30

Successful
25 20 15 10

Rethinking the concept

Renewal begins with examining the existing concept to identify strengths to exploit and shortcomings to address. The good news is that a retailer does not have to start from scratch to get growth from a mature concept. There can be strengths even in dire situations.

Not successful*
5 0 2

Years from start of renewal Successful Walgreens (1981), CompUSA (1994), Lowes (1990), Tesco (1992) Not successful* Merry-Go-Round (1990), Revco (1988), Venture (1992), Charming Shoppes (1991), Petrie Stores (1987), Roses Stores (1989)

Kohls, for example, looked like any other US * Or failed to renew Source: Compustat; annual reports; McKinsey analysis regional discounter in the mid-1980s. It had built a relatively protable, low-priced range of clothing and general merchandise. But as Wal-Mart began to expand, Kohls was threatened. Many other retailers responded to Wal-Mart by moving up market. But Kohls strengths were tight operating disciplines and a lean cost structure which, while no match for Wal-Mart, gave the company a notable advantage over some department store chains. It was able to use these strengths to reposition itself in the gap between the two, combining a department store feel (parquet oors, recessed lighting, well-known national brands) with a near-discounter price and cost structure. As a result, Kohls increased sales productivity and earnings during a period when many other regional discounters went bankrupt (Exhibit 5).
Exhibit 5

A renewal success story

Example: Kohls Kohls circa 1986 Consumer proposition Assortment A typical regional discounter Broad assortment of clothing and other general merchandise Primarily unbranded Pricing Everyday low price Absolute lowest price on national brands heavily promoted (70% of volume) Department store feel (parquet floors, recessed lighting) with discounter cost structure (centralized checkout) Kohls circa 1996 Department store brands and ambience at discount store prices Category killer in moderately priced, branded basic clothing and domestics Competitive dynamics Wal-Mart encroaching on territory, but a gap in market created as department stores move up scale Strengths to leverage Operating discipline and low cost structure of a discounter Results $257 sales per square foot (30% growth over 5 years)

In-store environment

Discount store feel

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Rethinking a concept in this way involves four elements: 1. Understanding the building blocks of renewal. Many retailers believe quantitative analysis and market research get in the way of creativity. Yet most efective renewers start by developing a solid fact base about the potential building blocks of renewal customers, brand image, competitors, and capabilities (see text panel) because they know that understanding them will reveal opportunities and identify distinctive strengths to work on. One gasoline retailer studied the shopping patterns of hundreds of consumers. As well as highlighting the occasions that brought customers to the retailers sites (journey to work in the Exhibit 6 morning, school run in the aternoon), the Understanding consumer behavior analysis revealed other stops made on these More frequent trips (to pick up dry cleaning or visit the Less frequent bank) (Exhibit 6). The retailer was then able to decide how it could use its numerous Format visited superior locations to take a greater share of Grocery wallet by ofering selected convenience goods Drugstore and services. Convenience
m (p (a ai nm ) m ) en nd rt s t( pm ) k k te En W W Er
Mall

Scrutinizing competitors can throw light on important factors. One multi-category reDry cleaner tailer wanted to know why its main rivals had Post office higher revenues per store. It used market Gas station research to determine their market penetraVideo store tion (the share of potential customers in a market who visit a retailer) and the frequency of customers visits; it also visited competitors to estimate the size of a typical customers basket of goods. The research showed that, contrary to managements expectations, the retailer fell short in only one of these areas. With this knowledge, it was able to focus renewal on that area, while continuing to build on its strengths elsewhere.
Restaurant ATM point

A hard look at internal capabilities can also indicate how renewal should be approached. Faced with erce competition from electronics superstores, electronics retailer Radio Shack was hard pressed to maintain its performance. It clearly could not match the wide assortment, low cost structure, and equally low pricing of its formidable competitors. Instead, it capitalized on meeting the needs that they did not satisfy: for friendly, accessible outlets stafed by knowledgeable, approachable salespeople. To deliver its renewed concept of Youve got questions, weve got answers, Radio Shack built on two assets: its unique electronics repair facilities and its relatively small stores in neighborhood locations. It also focused on providing an exclusive assortment of telecommunications products and services. Recent deals with

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ea

or

or

ra

ls

TOP SIX RENEWAL BUILDING BLOCKS: HOW RETAILERS USE THEM

1. Understand what brings customers into your store. A gasoline retailer took advantage of the fact that it was one of many stops for people on their way to work. It added products and services such as food, dry cleaning, and video rental that consumers were already purchasing at other stops to build transaction sizes and thus site protability. 2. Understand how the consumer shops. A general merchandise retailer found its customers typically shopped in three to four categories but purchased in only one or two. It converted this desire to shop into actual purchasing and larger transactions by changing the store layout and remerchandising. 3. Know what your brand means to consumers where you have credibility and where you do not. Sears built on its reputation for quality in hard lines (appliances and tools) to convince its mainly female customers to come see the softer side of Sears and purchase its relatively protable clothing lines. 4. Understand what consumers like (and dislike) about your competitors. Smart & Final recognized that while customers shopped at warehouse stores because of their low prices, they also felt that these stores were inconveniently sited, too big, and limited in their ranges. Smart & Final capitalized on its smaller shops in more convenient locations to develop a warehouse store tailored to small food service operators. 5. Know your competitors economics. Taco Bell understood the economics and processes of its hamburger-making competitors, so it knew it could bring labor and other operating costs below theirs by outsourcing food preparation. It was therefore able to support value pricing with favorable nancial results, while competitors were left with only unattractive ways of responding. 6. Know what unique capabilities you have that are worth keeping. A retail pharmacy recognized that consumers associated it with health knowledge and that its pharmacists had unusually strong relationships with customers. In a competitive, generally price-led market it was able to carve a niche with a health-oriented concept, offering an expanded range of health-related products and further in-store counseling.

Sprint and satellite television service DirecTV have helped make Radio Shack the local telecommunications destination. 2. Injecting conscious creativity to generate winning renewal concepts. A strong fact base by itself is unlikely to lead to a winning concept. Efective renewers take the facts and then apply bold creative thinking to them. Some retailers do this intuitively; others make more deliberate, structured eforts. One drugstore chain was threatened by low-cost mass merchants encroaching on its protable prescription business. Standard analysis might have suggested renewal should be based on an enhanced general merchandise selection; a number of drugstores have moved in that direction. But ater holding workshops in which senior managers and representatives from advertising agencies, healthcare rms, and market research companies were encouraged to play creatively with its building blocks, this drugstore developed a healthcare advisor concept instead. The concept builds on the retailers pharmacists, who have a reputation for giving reliable health advice, to ofer goods

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and services geared to total health. Shop signs and literature explain the health implications of over-the-counter items; upscale cosmetics and skincare products have been remerchandised to emphasize their claimed health benets; and the chain holds in-store health classes. Recent McKinsey research into big ideas in other types of company found that many are generated by asking provocative opportunity questions. Southwest Airlines low-cost, low-service proposition responds in essence to an opportunity question in the airline industry: What would it take to cut my costs in half ? Starbucks cofee shops concept of an afordable luxury an excellent cup of cofee served in a smart, trendy environment is an answer to another question: What emotional, psychological, or status benet could people derive from my product/concept? Such a structured approach can be useful to retailers seeking to move from facts to powerful ideas. 3. Renewing the back room as well as the front room. Some of the most powerful renewal eforts use breakthroughs in the back room (in-store operations and logistics, for example) to create more sustainable competitive advantages in the front room (in the range of goods, pricing, service, and other features visible to the consumer). Taco Bell took this route when searching for growth in the 1980s. It identied an opportunity in radically low-priced, high-quality fast food and accordingly cut the price of its core menu by more than 25 percent. This concept of value pricing drove sales growth of more than 60 percent. To make the idea protable and sustainable, however, required changes in the back room to reduce costs and support higher sales volumes. Taco Bell recongured its back room by outsourcing food preparation and investing in systems to manage high trac. This freed store staf to serve the crowds, released kitchen space to convert to seating, helped maintain consistent food quality, and reduced the operating expense ratio by lowering labor costs while maintaining high volume. CompUSA, the US computer superstore, focused its renewal on developing backroom businesses that support and in turn rely on its retail concept. A training business serves retail customers, for example, and then uses retail sites as classrooms for corporate customers. Corporate sales and service businesses use the retail sites as a base for sales teams and delivery trucks. And mail-order customers across the country can avoid postal charges by returning merchandise to the retail stores. These ancillary businesses have not only increased CompUSAs protability, but made it a strong competitor in many areas beyond store-based retailing. 4. Modeling the economics and rening the concept until a viable formula emerges. Finally, successful renewers model a concepts economics

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rigorously and rene the concept through iterations and tests until a formula emerges that can be rolled out. One specialty retailer hoped to attract new customers and increase the frequency of core shoppers visits by expanding into childrens merchandise; by creating an upbeat, high-tech environment; and by enhancing service through the introduction of personal shoppers. But before jumping into a pilot, it decided to try to increase its chances of success by gaining a thorough understanding of the concepts economic drivers. In doing so it gained three valuable insights. First, by modeling the concepts economics, the retailer found that 60 percent higher sales would be required to ofset estimated investment and expenses. But competitors benchmarks and market research indicated that sales were unlikely to increase by so much. So the retailer reexamined the concept and estimated the return on investment of individual merchandise lines and services. It did away with high-cost, low-return elements such as the personal shopping service and managed to improve returns without compromising the core of the renewal idea. Next, the retailer analyzed direct product protability to determine which product categories provided the greatest return for the amount of store space occupied. The analysis indicated that it should narrow its assortment to focus on childrens stufed animals and games and cut down on childrens books, CDs, and clothing. Finally, the retailer modeled return on investment by store type, varying assumptions for stores according to the demographics of their catchment areas and their performance levels. It found that creating a high-tech environment in every store would not maximize returns. In fact, it paid to conne large investments to stores in areas where there were sucient numbers of highly educated, middle- to high-income consumers aged 18 to 45. The retailer therefore decided to tailor investment according to the demographics of each stores customer base.

Using store pilots as laboratories

Once a concept looks good on paper, an efective renewer uses an in-store pilot as a laboratory to conrm the overall idea and get the main consumer, operations, and economic elements right. While most retailers are familiar with the theory of piloting, they use it with varying levels of success. The best ones distinguish themselves by turning piloting into a core skill. The laboratory approach means taking the concept to market quickly, and then adjusting it there through repeated piloting. A general merchandise retailer opened six pilot stores as soon as its concept seemed right on paper, and

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used the results to strengthen the concept. One category, expanded in expectation of competitive advantage, was poorly received, so the retailer slimmed it by 35 percent. Popular, frequently purchased items had been placed at the front of the store for convenience but customers tended to buy them and then leave. The solution was to move these items to the back of the shop so that customers would be forced down the aisles and, it was hoped, succumb to other goods as well. Demand for one new category of products was better than expected, but high operating and capital costs drove down the return on invested capital; these items were therefore eliminated. Finally, new advertising performed poorly, leading to changes in advertising mix and spending. Overall, the changes improved performance greatly. Other cases show that the way a renewal pilot is designed can make the diference between success and failure. Two pilots run by a category killer taught it lessons about site selection, investment levels, stang, and performance monitoring. The rst pilot tested a high-service superstore concept. One high-performing store was chosen as a testbed and more than 70 staf were taken on to upgrade service; $1.5 million was spent on store design. The result was phenomenal sales, but the high cost of the investment made the concept economically unattractive. In addition, because it had tested the idea only in one high-performing store, the company could not establish whether other, lower-performing stores could achieve similar sales improvements. The pilot was never rolled out to the chain. The second attempt worked. The retailer ran pilots in various sites more characteristic of the broader network. It tried out two versions of the concept, with diferent levels of investment and varying products. It used a small, full-time, crossfunctional team to manage the pilot and the subsequent rollout. And it monitored performance thoroughly, tracking a broad range of nancial metrics (including return on invested capital and net present value) and measuring consumer reaction through focus groups and by accompanying customers on store visits. The retailer also tracked a set of control stores and adjusted the results to account for sales cannibalized from unrenewed stores near by, competitors response, and site-specic cost diferences. As a result, it has sustained a 15 percent improvement in renewed stores and is rolling out the concept across the remaining network.

How to aford renewal

One of the biggest challenges of renewal is afording it. Given the extent of change required and the asset-intensive nature of retailing, managing renewal costs can appear overwhelming. Efective renewers take deliberate steps, akin to those used in turnaround eforts, to manage operating and capital costs aggressively and to accelerate returns to make renewal afordable.

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Roll out quick hits immediately. Piloting enables a retailer to test a host of ideas quickly. Efective renewers seize on cash-generating schemes that are easy to implement and execute them immediately, without waiting for the rollout of the main concept. One convenience retailer, testing a wide array of merchandising ideas, achieved good sales from lines of drinks and confectionery that required little in the way of new store xtures. It rolled them out straight away before the pilot was complete. Sales and operating cashow rose 5 to 10 percent across the chain in these categories, reenergizing the entire organization. Tailor investment to each stores ability to generate value. Successful renewers know from efective piloting which aspects of their concept create value under which conditions. They therefore tailor investment to each stores ability to generate value. A second gasoline retailer varied investment according to each sites format and potential for improvement. Medium-sized sites with good improvement potential but no room to expand warranted a $750,000 investment to knock down and rebuild. Sites with limited potential were put on the closure/sale list, except for larger sites with good auto-repair facilities, which were remerchandised for less than $20,000 (Exhibit 7). Find ways to share costs. Renewers nd creative ways to share costs with others who have a vested interest in their success. Most retailers turn to vendors, which will usually provide support in the form of new xtures, promotional programs, and consumer research and help in disposing of excess merchandise. Government agencies can assist as well. One North American department store received government funds to develop a retailing school that provided training in renewalExhibit 7 related areas such as service, merchandising, and the supply chain to employees Tailoring investments to potential for improvement and selected customers, vendors, and (nonExample: Gasoline retailer competing) retailers. Other companies negotiate tax or zoning concessions. Shopping center developers, which benet from a renewed stores improved performance, may be persuaded to reduce lease rates, to provide additional space at cut prices, or to enhance facilities. The idea is to think broadly about sources of funds, then engage prospective partners in a renewals success.
Do nothing; investigate options to close/exit Remerchandise only (<$20,000) Refit and remerchandise ($4060,000) Convert auto-repair facility to selling space ($80200,000) Knock down and rebuild ($750,000$1 million)

Store size Small Medium Medium Large Palace

Auto repair Yes No Yes Yes Yes

Site improvement potential Low Medium High

Communicate the concept to consumers

A renewer must dislodge consumers feelings about its old concept and create the right

Assessment criteria Current fuel and store volumes Location: highway, neighborhood, city thoroughfare Competition: fuel, retail, fast food

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expectations and excitement about its new one. A fresh advertising approach may be needed. One renewing retailer had to replace its advertising agency because the old one, which had worked with the previous concept for years, had trouble grasping and communicating the revised proposition. For any retailer, efective communication is vital at the point of delivery in the store. Because retailers have such a difused front line, successful renewers take various approaches to communication and training. One department store uses a cascade approach, training managers in the head oce and in the eld who then train the sales staf. Another retailer uses a road show to explain new concepts. And one has installed a satellite communications network to discuss rollouts with staf from headquarters and stores.

Dont let rollout be the end of renewal

Successful renewers dont allow rollout to be the end of renewal. They continue to identify, test, and implement ideas to improve performance. Boots, the UK pharmacy chain, repositioned itself in the mid-1980s around a large health and home format and a smaller health and beauty format. Although much of the implementation was completed by 1990, Boots continued to develop its concept (Exhibit 8). In 1992, it tested a food
Exhibit 8

Continuing renewal throughout a rollout

Example: Boots

Sales per square foot ()

600

Tested Boots food store in London

Health and food departments merged Sound and vision, gift shop, and cook shop amalgamated back into main store

500

400

300

After mid-1980s renewal, operating two concepts: Large format health and home, incorporating 9 stores within store Small format health and beauty, with large range of cosmetics projecting luxurious image

Opened Boots pharmacies within Sainsburys stores Put trained homeopathic consultant in every store

Boots No.7 cosmetic brand relaunched Boots magazine launched New store design piloted in Nottingham Loyalty card tested in Norwich

Medical advice booths added to pharmacy Further loyalty card tests Allocated 300 million to build 7 separate sizebased formats New advertising: Looking good, feeling good

200 1990

1991

1992

1993

1994

1995

1996*

Continuous development of new private labels and subbrands

* Estimated

store in London. In 1993, it experimented with pharmacies in Sainsburys supermarkets, and took on homeopathic consultants. In 1994, it decided to

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emphasize healthy lifestyle by merging the health and food departments in its main stores, with the accent on private-label items. By 1995, Boots had relaunched its own-label cosmetics and introduced a magazine to educate customers on health issues and to promote products. The same year, it tested a loyalty card in Norwich and a new store design in Nottingham. In 1996, it added medical advice booths at each pharmacy and ran an advertising campaign capturing the essence of the many changes made over recent years: Looking good, feeling good. As a result, a Boots store in 1997 looks quite diferent from a Boots store in 1990. Yet, as with other renewals, the concept is so frequently ne-tuned that it is impossible to say where any one adjustment begins or ends.

Become a continuous renewer

Learning how to renew themselves continuously is the ultimate imperative for retailers. Some, such as the US restaurant chain Sizzler and the grocery chain A&P, took on a new lease of life in the 1980s, only to falter later when their reinvigorated concepts ran out of steam. Those that have renewed themselves continuously, such as the The Gap fashion stores and Walgreens drugstores, have sustained superior returns (Exhibit 9).
Exhibit 9

Sustaining value through repeated renewal

Pretax return on invested capital as a percentage of sales Successful but unsustained renewals add less value over time Sizzler (1981)
80 60 40 20 0 10 1980 1996

than continuous/repeated renewals The Gap

80 60 40 20 0 10

A&P (1982)
80 60 40 20 0 10 1980 1996

Walgreens
80 60 40 20 0 10

1980

1996

1978

1996

Continuous renewal requires a retailer to do three things: 1. Establish a continuous renewal process. Successful retailers always look ahead for the next great idea. They establish processes to identify, test, and implement ideas quickly. To start with, these companies scrutinize the industry landscape for red ags signs that herald changes in consumer needs or competitors or suppliers activity. Walgreens monitors such early warning indicators through market research, a sophisticated store and item-level tracking system, and

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ecient communication between eld and headquarters. The US warehouse chain Smart & Final surveys customers, tracks shopping behavior through point-of-sale systems, and sends staf to visit competitors. Ideas are generated through formal mechanisms. At Smart & Final, idea generation is incorporated into strategic planning; at one convenience store chain it is the responsibility of a concept development team; and McDonalds canvasses franchisees for ideas (many of which, like Chicken McNuggets, are integrated into its concept). Most renewers test their most promising ideas quickly and cheaply in stores set aside for the purpose. Wal-Mart has several vendor stores where it works with vendors to test xtures, assortments, and layouts; McDonalds tests in 20 percent of its company-owned sites; and Smart & Final and Circuit City, which sells appliances and electronic goods, have a laboratory store each. A European grocer has SWAT teams which move from market to market acting on ideas ranging from new xtures to fresh approaches to service. 2. Build exibility into the asset base. Continuous renewers own and manage their assets in ways that enhance exibility. A creative view of asset ownership led Loblaws, the Canadian grocer, to ip the traditional approach on its head: it owns sites (where they are easy to sell and leases would be long and expensive to break) and leases xtures (so they can be changed as requirements evolve). Wal-Mart buys and leases sites for its discount stores that are larger than required to enable ready expansion or conversion to supercenters. Location requirements alter over time, so successful renewers have to manage assets exibly so they can open and close stores quickly. Smart & Final retained only 20 of its original 84 stores when it reinvented its concept (Exhibit 10), while Lowes, a $7 billion home improvement retailer, changed 30 percent of its 330 stores over ve years as it renewed its formula to keep pace with Home Depot.
Exhibit 10

Restructuring the site portfolio

Example: Smart & Final Number of stores

Stores in 1984 Stores opened/ expanded/remodeled Stores closed Stores in 1996

84 147 64 167

Average size (sq.ft) 7,500

17,000

The exible approach to assets reaches all the way down to store xtures. As part of its renewal, one retailer has equipped stores with modular xtures that can be easily dismantled, reassembled, and moved around the store.

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3. Continuously renew frontline skills and behaviors. Continuous renewal requires frontline employees to execute frequent changes in the retail concept which in turn requires adjustments in their skills and behavior. Smart & Final refreshes employees skills at Smart University and has 26 eld trainers to supplement the universitys reach. The cost is partly met by government funding and by extending training, for a fee, to selected customers, vendors, and other retailers. Some continuous renewers use individual scorecards to raise aspirations and modify behavior down the line. The gasoline retailer that analyzed its customers shopping behavior addressed its employees behavior as well by giving all of them, from senior managers down to forecourt attendants, scorecards describing the sort of conduct greet customer within x seconds, for instance needed to make the concept work and to hit nancial targets. The cards also established measures and goals for the most important elements. Employees were rewarded for hitting or exceeding goals. As the concept evolved, behavior and goals could be adjusted using the cards. In addition, continuous renewers nd ways to increase their organizations capacity. One European retailer rotated staf through dedicated renewal teams that identied and rolled out fresh ideas. For an incremental investment of only four or ve people at a time, the retailer continuously renewed its concept and upgraded its organization.

Concept renewal can rejuvenate a retailer and add substantial value. It is a challenging task, but it can be accomplished if creative concept development is combined with brutally ecient turnaround disciplines as a concept is rolled out. Crucially, it does not stop ater one success: winning retailers stay on top by remaining vigilant over market conditions, building exibility into their assets and organization, and constantly testing and adjusting their concepts. Continuous renewal, they know, is the heart of successful retailing.

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