McKinsey gets real in retail jungle

Managerial thought leader Dogbert once observed: “If you combine con and insult, you get consult”. He went on to guide Scott Adams’s boss through a restructuring whose brutality made it worthy of a Harvard Business Review case study.

A store selling underwear and make-up set up by management consultancy McKinsey appears to undercut such satires. At last, the high priests of multinational capitalism are running a proper business, rather than telling everyone else how to do it. Or are they?

The Minneapolis store, Modern Retail Collective, is pitched as a way for McKinsey clients to test new technologies and analyse shopper behaviour. The consultancy will not only rake off a fee, it may also furnish insights the consultancy can sell to US retailers petrified of Amazon and other online disrupters.

America has a retail crisis on its hands. Despite robust consumer spending, many venerable businesses are floundering. Sears, Toys R Us, Barneys New York, Payless and Gymboree are among the high-profile names that have filed for bankruptcy.

It is questionable whether lessons gleaned from running a loss-making shop in a giant mall will be particularly useful in the age of Amazon. Americans are spending less money on stuff and more on experiences. Recent earnings announcements show the divide between winners and losers is widening. Those who do well tend to be big-box stores and off-price retailers. These have invested heavily to respond to shoppers’ shift online with quick, free delivery and better products than Amazon. At the other end of the scale are mall-based stores that have failed to differentiate.

US retailers face deep, structural issues. These will not be solved by smart mirrors, cryptocurrency payment options or bra-fitting software. /London, September 27

© The Financial Times 2019