the roadmap of joint value creation beyond price

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JOINT VALUE CREATION
BEYOND PRICE
Advisory Group, February 4 2005
UPDATE
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Nominations
Work Program
Schedule
Conference
Call for nomination responses
Retailers Confirmed
A.Heijn, dm, Interdis, Selex, Superquinn,
Tesco, Tradeka, Veropoulos
Manufacturers:Confirmed
Barilla, Colgate Palmolive, Ferrero, Heinz,
Heineken, Henkel, Kraft,Sara Lee,
Pernod Ricard, P&G, Unilever
Others: University Of St Gallen, IGD
BACKGROUND
• Market place increasingly challenged by deflation and declining or
stagnant market size.
• Manufacturers and retailers rely more and more on “price” as the only
value driver.
BOARD
• The current trading environment, shaped among others by
discounters, has emerged because ECR retailers and manufacturers
have not yet been able to totally fulfil consumer wishes.
• Price is only one value driver. ECR Europe recognises the role played
by other value drivers (e.g. health, convenience, proximity, changes
in household profiles).
• Major roadblock to value creation, implementation of ECR demand
creation processes: the buyer-seller relationship looking on quick
return rather than looking to build sustainable value for
o the consumers and shoppers
o for the companies. .
THE RECOMMENDATION
• ECR Europe shall set up a project to improve
Joint Value Creation Beyond Price.
The project aims at:
• Encouraging a wider usage of Joint Business
Planning to increase shopper and consumer
attraction and loyalty
• Review: explain/understand the environment
• Present innovative solutions in the shopping
experience and product offer which lead to
market growth by addressing other
consumer/shopper value than price.
Joint Business Plan
Objectives
-Profit & Loss
-KPIs
what do you want to achieve
•
sharing company target/vision
How to achieve business objectives
Collaborative
Projects
Data sharing
Supply chain
efficiencies
Category
management
Source:adapted IGD Research
New product
development
-POS
- Loyalty Cards
- Panels
- Surveys
- ….
Value creation beyond price Program
Framing the issue: Deflation, commoditisation, reduce share of wallet for grocery
– Definition of different values (consumer, manufacturer, retailer)
– Roadblock: buyer-seller/cash/margin culture
– Environment changes :
– Socio economic changes: demographics, culture and aspiration, consumption
patterns
– Competition: other industry sectors, new channels, affecting consumption and
share of wallet
– Innovation : ability to answer to changing needs and aspirations (in grocery
and in other sectors)
– Industry structural change due to globalisation, IT development (ie use of
internet)
– The creation of long term value: economist and financial perspectives, benchmark
with other sectors, benchmark across categories
Process
• Strategic alignment (roadmap of joint value creation collaboration)
• Principles of Joint Business Planning
• Business Planning: how to integrate various business processes within your company
and with your trade partners (Organisational design)
• Scorecard (measurement of value created and return )
Value Creation
• Case studies - Shifting money from price to other value drivers
• Benchmark categories: which are growing and how/what is driving their growth. A
contrario : categories destruction by price strategy
Break out session - draft
• Presentation of the project group
(why the issue, why the group, how session will
• The environnement
–The key elements of value in retail
• Supply chain, Sales Growth, Margin
–Danger of sole focus on discount and price
–What the financial markets are seeing
Speaker: Financial retail analyst (TBC: DavidMc Carthy)
• The Values Definition:
What is your definition of value ? (electronic vote)
• Working together to grow sustainably : the
roadmap of joint value creation beyond price
•
Heineken and Carrefour (Italy)
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