McKinsey's high street move hints at where it sees the money
McKinsey says it will launch a retail concept store onto the high street. McKinsey have long been bullish on retail shopfronts, but slightly critical of them not keeping up with evolving consumer tastes and similar. By pushing out their own concept store they’re looking to learn more about the sales process, more about what will work and to test innovations that their clients may be too afraid to do in their own environment. Clever stuff.
- McKinsey believes physical stores are here to stay
- Its primary aim seems to be to experiment with choices inside — tracking everything with data, giving consumers more choices and embedding IoT programs
- McKinsey also looking to match offline browsing with online sales (so called window shopping) to close the loop on offline impacting online
The cynic in me thinks McKinsey may be recognising that its advice may not be practical a lot of the time. Perhaps they’re also looking for more experience to close the loop on retail clients.
Of course this also provides a playground to test new innovations. Interesting callouts are mirror matching (can this be the recommendation engine of modern retail?) and the focus on data. I have long thought that while bricks and mortar is a people game, it should be far more data-driven than it currently is.
The nugget in what McKinsey is doing is it seems to want to actively explore what data matters and doesn’t in a retail environment. Learning about that might help the consultancy get on the front foot of data strategy for clients, and area where management consultancies and agencies are noticeably behind.
Being data-driven as a retailer though is harder than it first appears. Loyalty programs at scale can solve some of these issues (see Woolworths), but for smaller players, stitching together data from stores poses a nightmare challenge in both collection and verification.
I suspect McKinsey will learn this and likely advise clients on it.
Data transformation is something where management consultancies have long been particularly blasé and imprecise, and that agencies are yet to fully understand outside of technology implementation. Doing it within retail, particularly bricks and mortar, poses new and difficult challenges in collecting data and making it usable.
Although the experiment is interesting, it tells you that McKinsey sees its next spurt of growth through advising on retail data, and is positioning accordingly. Time will tell if it understands the complexity of the issue it's about to tackle.