McKinsey is in the retail game!? Well, yes and no. The McKinsey retail store opened this past September at the Mall of America in Minneapolis, MN. Chances are, however, that even if you’ve walked past the store, you may not have even realized McKinsey was behind it.
This retail concept is not a clever way for the consulting firm to diversify its business. Instead, the experimental store is built to support McKinsey’s consulting practice and will be used to test various hypotheses in the retail and technology sectors. A real-life R&D lab? We think that's pretty innovative, as well as a clear sign that the firm is doubling down on its Retail practice.
What Can You Buy from the McKinsey Retail Store?
Now, you're probably thinking - what can I buy from the McKinsey retail store? We were curious too!. Named the Modern Retail Collective, McKinsey’s store sells a variety of up-and-coming brands, including:
- Kendra Scott (jewelry)
- ThirdLove (lingerie)
- Type:A (deodorant)
- Elve (cosmetics)
The number and type of brands are scheduled to change every few months, and McKinsey will keep the store open for at least a year.
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Why Does McKinsey Need a Retail Store?
The main purpose for this opening is to give McKinsey a laboratory to conduct research on the interplay between technology and retail. The company wants to provide a real-life experiential retail playground that can be used by clients and consultants. They want to see the types of retail tech that work best in boosting sales and enhancing customer experience. Of course, the store will also help provide data on which methods and technologies perform the poorest as well.
McKinsey will be working with various technology companies - including Microsoft, RetailNext, Chatter Research, Compass Marketing, FaceCake, Farfetch, Flexa, MSM Solutions, Smartrac, Square, and Zebra Technologies - to integrate the latest in retail tech. Specifically, the firm will be testing different retail tech methods, including the following:
- Smart mirrors that suggest outfits and fit
- Interactive mobile hotspots providing single-tap access to product details and allowing customers to create a virtual basket
- Accepting cryptocurrencies as payment
- Personalized visual configurations of retail items (i.e. bracelets)
McKinsey plans to introduce an increasing number of exciting new methods in the store. These new ideas will have the ultimate goal of providing customers an immersive shopping experience through technology.
What Does This Mean for the Consulting Industry?
McKinsey’s retail store is a fresh and innovative way for the firm to provide clients with unique insight. Regardless of how many customer surveys and data points consulting firms are able to produce and analyze, nothing beats real-world interactions with customers.
For this reason, the Modern Retail Collective has made quite a splash in the consulting world. It will be interesting to see how competitors like BCG and Bain will react. If the experimental project goes well, it’s within reason to believe that McKinsey could scale this concept across the country (and globally). Reportedly, there are already a dozen experts and a full-time team dedicated to the retail store.
As you well know (and McKinsey does also), running the brick-and-mortar retail concept requires a large investment and is a challenging landscape to succeed in. As a result, McKinsey has made the decision to heavily subsidize the project. In this case, the store will be used as a loss leader. They'll use it to sell downstream projects to existing clients and entice other retail companies to engage with McKinsey. However, only time will tell if the store will be enough to differentiate the firm and win over clients in the retail and technology sectors.
Concluding Thoughts
With thousands of retail stores closing every year in the Amazon era, McKinsey is looking for ways to reverse the tide. The firm remains bullish on physical retail stores; however, only if done right. As a result, we'll be following the Modern Retail Collective closely to see if the consulting giant can can figure out a way to make physical retail stores worth the investment. Of course, if there’s any consulting firm that can figure out a way, McKinsey would have to be near the top of the list!