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Organic Grocery Margin Pressure
Our client is a regional organic grocery chain experiencing a 15% decline in profits despite stable revenue. How would you structure your approach?
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📋 Solution:
Organic Grocery Margin Pressure
Clarifying Questions:
• Is the decline occurring across all stores or specific regions?
• Has the company changed pricing or sourcing strategy recently?
Solution:
I would structure this around three drivers: revenue quality, cost pressures, and structural market shifts.
- Revenue quality
• Assess mix shifts toward lower-margin categories.
• Evaluate promotional intensity and discounting trends.
• Analyze private label versus branded mix.
- Cost pressures
• Evaluate supplier price increases and freight costs.
• Review labor and store-level overhead trends.
• Assess spoilage and inventory shrink.
- Structural market shifts
• Assess competitive entry from mainstream grocers.
• Evaluate changes in consumer spending patterns.
• Identify channel migration to online delivery.
