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Consulting & MBA
MMcKinsey & Companyadvanced2024

A National Supermarket Chain Experienced a 20% Profit Margin Collapse: How Would You Diagnose It?

Case Round 1 · 0 years of experience

Arjun Mehta
Verified McKinsey & Company

Engagement Manager at McKinsey & Company

Our client is a premier national grocery chain with 450 stores operating across India and Southeast Asia. Over the past 18 months, their top-line revenues have grown by 4%, but operating profit margins have plummeted by 20% (from 8% to 6.4%). The CEO has engaged McKinsey to identify the root cause and present a concrete 12-month turnaround strategy.

A way to think about it

Key Diagnostic Framework: In a retail margin squeeze with rising revenue, the culprit is rarely pricing—it is usually supply chain shrinkage, channel mix shift (high-margin in-store vs low-margin online delivery), or SKU cost inflation.

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A National Supermarket Chain Experienced a 20% Profit Margin Collapse: How Would You Diagnose It?: Interview Question & Answer Preview | InterviewPrepAI