Case Study Details
The Company: Truworths International
“We were able to achieve growth in the mid-20% [range] and see return on equity of well over 50% in the years following working with David Lapin.”
– Michael Marks, CEO of Truworths
Some years ago, Truworths, an international fashion retailer with over 300 branches, inexplicably began to lose its dominant market position. Its attempts to replicate its competitors’ successes drove it further into its spiral of declining market share despite a buoyant market. At that point Truworths engaged Lapin International as its strategy consultants.
The Lapin International Challenge
We helped their leadership team move beyond the space that was occupied by its competitors. We stimulated them to think about their industry in ways no one else had. We had them question the very soul of their purpose – both as individuals and as a business enterprise. They delved into the soul of why people buy fashion and why they are willing to pay such a premium for it. What is it that fashion buyers want for that premium? What intangible yearnings need to be satisfied in their buying experience? They built the answers to those questions into everything that Truworths did: the way they purchased, merchandised, managed people, advertised, and designed their customers’ unique experience.
Others could imitate Truworths fashion and copy its plans. But nobody could copy the new culture that Truworths was developing, a vital component of its strategy to deliver a differentiated offering. The architecture of the new culture was founded in the Value System we designed with the team. A value system, unlike a set of values, is unique to each company. Using their value system they unleashed human energy and innovation, liberated their managers from bureaucracy and empowered them to make decisions.
Since we started to work with Truworths they have achieved in excess of a 25% year-on-year average growth rate, and returns on equity in excess of 50% have defied market analysts. They were recently rated1 as the second best fashion retailer in the world (after Abercrombie & Fitch) for return on investment and margin.
Michael Mark explains the consistent growth:
“Truworths’ profits rest on the human and intellectual component of what they are selling, not on a commoditized material product similar to that sold by their competitors. The nature of that human component allows for continuous innovation and the protection of Truworths’ premium margins and the growth of its market share.” Truworths has moved beyond the very idea of competitive advantage and operates in a space in which in many ways, it does not have competitors.
In recognition of Lapin International’s work, David Lapin was invited to join Truworths International’s first Board of Directors after it was listed as a publicly traded company.