DC Strategy case study/business strategy

Mobi Access Careers

Darell Lea
23 Dec 2008

Article PDF ( 88KB)

The Business

Darrell Lea was established in 1928 and has grown steadily since then to become Australia’s largest privately owned confectionary company, with approximately 1,000 employees, and exporting to a range of overseas markets.

The company operates approximately 75 of its own Darrell Lea branded retail stores and has over 470 other independent operators distributing through store locations or fully branded stands around Australia. The display units, located within other stores (pharmacies, newsagents, video outlets, etc) allow Darrell Lea greater geographic distribution and penetration of markets than may otherwise prove too small to warrant the overhead costs of a fully branded store.

Darrell Lea is a manufacturer by nature, producing most of its own products that are stocked in the retail channel.

The Challenge

As a primary manufacturer, Darrell Lea’s distribution strategy as a retailer and wholesaler had grown over the years in many varied and disparate forms. The range of company stores, licensees, sub licensees, agencies and retail sales units (RSU’s) created branding, supply, pricing, operations, marketing and consistency issues. These issues extended over a broad geographic area including metropolitan and extremely remote regional areas where the Darrell Lea name was well recognised and respected.

The primary challenge was identifying the appropriate business models that would enable Darrell Lea to realise their future growth and performance objectives. This challenge had to be tackled with due respect for the existing relationships and commitment of over 470 businesses that had grown as part of the broader Darrell Lea family and culture over many years.

The Solution

Darrell Lea engaged DC Strategy (DCS) as a channel specialist to assist the senior management team and owners of the business to evolve the distribution strategy in the company.

The primary objective was to identify the comprehensive distribution strategy that would provide a foundation for the future growth and performance of Darrell Lea across Australia.
The project focused on:

An extensive economic analysis of all existing distribution business models and Darrell Lea’s existing fxed cost base and operational framework
Identifying the sales volume penetration across Australia to understand the impact of volume and pricing and how these translate to proft growth opportunities
Analysing the impact on commercial and operational objectives and understanding how existing business models could be transitioned whilst respecting the existing relationships
Ensuring the sustainability of the distribution channel matched the medium to long term direction in the company.