Winning Productive Trips:
Shoppers, Retailers and the
Road Ahead
Presented by:
Bryan Gildenberg, Chief
Knowledge Officer
May 1, 2014
AGENDA
• The Trip Environment
–“A Polarizing World”
–“Outlet Consolidation”
–“Share Of Samers”
–“Transparent, Personal, Contextual”
• Some Thoughts On Responses
–Clear
–Digital
–Fast
–Effective
© Copyright 2014 Kantar Retail
2
Yes, Weather Is Often to Blame …
But only exacerbated underlying trends, as many turned online
Weather forecast map for
weekend before Christmas
Source: http://www.accuweather.com/en/weather-news/severe-storms-saturday-texas-to-tenn/21119943
© Copyright 2014 Kantar Retail
3
Convenience Is King as Shoppers Aim to Simplify
Ability to one-stop shop sees resurgence in importance
Share of Shoppers Rating Ability to Get All/Most Shopping Done
in One Place as One of Top Important Shopping Factors
Source: Kantar Retail ShopperScape®, January 2012, 2013, and 2014
© Copyright 2014 Kantar Retail
4
KEY MACRO/SHOPPER INSIGHT:
Less “Polar” Vortex And More Polar…
Income:
Generations:
Haves vs.
Have Nots
Older Americans
don’t enjoy
shopping as
much as
younger ones
Source: Kantar Retail analysis
Ethnicity:
Geography:
45% of under 30
America is nonCaucasian
America
becoming less
rural, and urban
areas drive
smaller more
targeted stores
© Copyright 2014 Kantar Retail
5
One Less Stop …
Store set contracts, again, in 2013
Average Number of Retailers Shopped in Past Four Weeks*
(among all primary household shoppers)
12.4
12.4
2007
2008
Average retailers
shoppers/month
(Jan–Sept)
11.1
2009
11.1
11.2
11.2
2010
2011
2012
10.7
2013
*Inclusive of visits to stores and websites; averages are for Q1–Q3 of each year.
Source: Kantar Retail ShopperScape®, January 2007–October 2013
© Copyright 2014 Kantar Retail
6
Trend Is Part of a Continuing Story…
Amazon growth vs. shopper base contracts at key competitors
Past 4-Week Shoppers, by Retailers*
(among all primary household shoppers)
* Inclusive of visits to stores/websites and use of catalogs
Source: Kantar Retail ShopperScape®, August 2007–December 2013
© Copyright 2014 Kantar Retail
7
Spending Intentions Signal Willingness to Spend
>50% = Same; fewer shoppers actively looking to curtail spending
Retail Spending Intentions in Coming Month Compared with Same Period Last Year
(three-month moving average)
Spend about
the Same
Spend Much/
Somewhat Less
Spend Much/
Somewhat More
Source: Kantar Retail ShopperScape®. June 2008–December 2013
© Copyright 2014 Kantar Retail
8
Shoppers Signaling More “Limiting” in 2014
Plus online shopping more likely to be in the mix
Planned Changes in Shopping Behavior: 2014 vs. 2013
•
2013
2014
49%
47%
– Buying fewer things
34%
38%
– Shopping less often
29%
31%
– Postponing more purchases
19%
21%
13%
15%
Deal Seeking … Still at top of the list, but
participation dips vs. last year
Growing participation vs. last year
• Limiting Behaviors
• Shopping Online
– Shop online more often
Note: Shading indicates significant difference vs. October 2012 (95% confidence level)
Source: Kantar Retail ShopperScape®, October 2012 and October 2013
© Copyright 2014 Kantar Retail
9
Long-Term Inflation Key to Polarized Outlook
Inflation focus in food/fuel aggravates Have/Have Not split
Inflation Impact on U.S. Household Income *
Nominal Compound Annual Growth Rate
Income Growth By:
High School/Some College*
All Households
4-Year College Degree**
Food & Fuel Prices
1980-1990
1990-2000
2000-2010
2010-2020F
* Yellow bars are average inflation rate
Underlying bars are average income growth for households
* High school education or only some college is indicator of “Have Not” households
**4-year degree or more is indicator of “Have” households
Source: U.S. Department of Commerce, and Kantar Retail analysis
© Copyright 2014 Kantar Retail
10
As a Result…
Retailer’s are adapting & changing price position
Of the top 70 supermarket retailers in the KR database, there are roughly as many
characterized as Value (19), Premium (23), and Mainstream (27)*
But projected dollar growth 2012E-2017E is:
“Haves”
“Have-Nots”
Source: Kantar Retail analysis; company reports
Premium
24.7% (CAGR 4.0%)
Mainstream
7.4% (CAGR 1.3%)
Value
67.9% (CAGR 6.4%)
© Copyright 2014 Kantar Retail
11
Think of Portable, Real-Time Information as
Climate Change
is one key symptom of that change — the
ability for shoppers to know retail — a
better product obviously reduces that
comparability!
So, what are the responses?
the ability for retailers to know shoppers
the ability for retailers to dynamically be the
right retailer at the right time for the
shopper
Source: Kantar Retail analysis
© Copyright 2014 Kantar Retail
12
Using Loyalty Data to Offer Personalized Pricing
Language all centered
around the user, showing
the personalization
Recommended deals
are designed to
convert the shopper
to purchase in other
categories
Source: Kantar Retail store visits & analysis
© Copyright 2014 Kantar Retail
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Personalizers
Data-driven individualized targeters
• Kroger and CVS in brick and mortar world
• Amazon is the ultimate personalized targeter
• Kingfisher’s view of dynamic pricing
• Non-transaction based personalized targeting
Will need to get more fluent at this type of
communication to help these winning retailers
continue to win (this is the practical example of how
“Big data” comes to life in retail)
Source: Kantar Retail analysis
© Copyright 2014 Kantar Retail
14
Contextualizers
Framers of a brand beyond shopping — targeting, but targeting a group
based on affinity & lifestyle need rather than transactions
• Whole Foods, lululemon,
fashion, Dollar General
• Who will play a broader role? Watching category
players starting to step up
– Blurring of media and retail – pronounced in
entertainment and in online advertising
– Interesting model – Netflix, which started as a “retailer” but has
turned into much more than that (content provider and
producer, data source – in essence have replaced a broadcast
network with a personalized and contextualized alternative)
Source: Kantar Retail analysis
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APPAREL SPECIALTY = CONTEXT
This changing context might be a bigger risk to apparel
retailers than Amazon…
© Copyright 2014 Kantar Retail
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CONCLUSIONS
• A polarizing world means value proposition needs to get markedly
better defined and articulated
• Outlet consolidation means I have to nail categories that shoppers
buy most often, and leverage them effectively – Rx and HBA for
Target are trip drivers, not basket builders
• Share of samer shoppers are less enticed by hot deals and
premiumization – they are trying to responsibly manage their
expense line
• Personalization and context are how we win the war against price
transparency…how will Target use categories and partners here?
© Copyright 2014 Kantar Retail
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KEY WORDS
• Clear
• Digital
• Fast
• Effective
© Copyright 2014 Kantar Retail
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Response from the PBORs
Demystification of high spend categories (what we sell)
Focus: Healthcare
• Better: “the aid” – a walking stick,
GPS and emergency help system
(“an iPhone on a stick” – J Rand)
• Personal: service (dieticians,
pharmacists, etc)
• Context: access to healthcare and
these better products
• What else gets demystified?
– Technology (Best Buy)
– Home Improvement (Home
Depot)
– Fashion (J. Crew)
– Beauty (Ulta/Sephora)
Source: Kantar Retail analysis
© Copyright 2014 Kantar Retail
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Health & Wellness Across the Box
Assortment:
Solutions
Rx &
OTC
Fitness
H&W
Food
Home
&
HBA
USD 25K competition and chance to partner with Target to find the best ideas
to 1) help people make positive lifestyle and prevention choices, and 2) help people live well with a chronic
condition
Source: Kantar Retail analysis
© Copyright 2014 Kantar Retail
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DEMYSTIFYING FOOD AND BEAUTY
• ShopRite Dieticians a key part of
“demystifying” good nutrition and
healthy living – best in class food
retailers will own food expertise
• Publix Aprons runs 10 cooking
schools, a YouTube channel and
in-store displays for meal
solutions
• HEB has beauty advisors in over
170 stores! Giant Eagle among
many to revamp ISV in Beauty..
© Copyright 2014 Kantar Retail
21
Strong Service Complements the Presentation
And facilitates sales growth
Sq. Ft. per Employee
Sales per Sq. Ft
Personalized
Interaction:
• Employees in aisle
• Live
announcements
• Handwritten
signage
Data as of 5/24/13
Source: Kantar Retail analysis; Facebook
© Copyright 2014 Kantar Retail
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CLEAR: BEST PRACTICE
• Assortment management – science and discipline to help simplify
an overcomplicated shelf
–Has to be non-self directed and holistic economically
• Signage – creative skill required to develop something the
shopper wants too!
• Digital –use digital touchpoints to help shopper navigation in and
before the shopping moment
© Copyright 2014 Kantar Retail
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KEY WORDS
• Clear
• “Digital”
• Fast
• Effective
© Copyright 2014 Kantar Retail
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Digital Impact: 100%
Even if you don’t sell much online (today), the impact extends
well beyond eCommerce
Source: Kantar Retail analysis
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Shoppers Leverage Digital Along Path
Regardless of product or source, multiple planning activities
User
Satisfaction
Navigate
Store/Site
Select &
Buy
Choose
Trusted
Source
Advocate
Community
Choose
Channel
Create
Demand
KEY:
Shoppers
Are In Charge!!
Source: Kantar Retail analysis
© Copyright 2014 Kantar Retail
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Use of Retailer Apps on Mobile Growing
Have Accessed Retailer Apps in Past Six Months
(among all shoppers)
2014
17%
2012:
7%
Source: Kantar Retail ShopperScape®, January 2013 and 2014
© Copyright 2014 Kantar Retail
27
Prime Penetration Now Nearly 1 in 5 Households
Trial to habit to loyalty – significant impact on overall shopping
Penetration of Amazon Prime Membership
(among all U.S, primary household shoppers)
21.5M
15.6M
11.2M
Source: Kantar Retail ShopperScape®, December 2011, 2012, 2013, Kantar Retail estimates
© Copyright 2014 Kantar Retail
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29
Source: Company reports
© Copyright 2014 Kantar Retail
© Kantar Retail 2014
Advising Decisions via Social Feedback
Featuring top-selling
accessories on center
display, aiding back-toschool item selection
through popular vote
Staff offer hand-written
recommendations of items,
helping the store feel more
personable and aiding selection
Source: Kantar Retail analysis, store visits (Canada, Germany, USA)
Calling out top-pinned items
on the shelf, highlighting for
shoppers what’s trendy
through shopper feedback
© Copyright 2014 Kantar Retail
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Making the Revolutionary, Routine
Digital removes friction, disrupts habit, and creates
more “chutes”
Personalized
Pricing
Digital Shelf
(content, images,
reviews, etc.)
Must build more ladders & flexibility into our processes
Source: Kantar Retail analysis, photos
© Copyright 2014 Kantar Retail
31
KEY WORDS
• Clear
• “Digital”
• Fast
• Effectiveness
© Copyright 2014 Kantar Retail
32
Food is Laggard; Online Arrived in Other Categories
Already over 10% of retail sales, headed to 20%
Combined Goods Categories (Ex-Auto, Food & Drug) vs. Food, Drug & HBC
Online Impact of Food, Drugs, & HBC
Food, Drugs/HBC
Source: U.S. Department of Commerce, Kantar Retail analysis
© Copyright 2014 Kantar Retail
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Amazon Fresh Drives Overall Online Grocery
Competitive dynamics will accelerate response
Online Share of Food, Drugs, HBA
36%
CAGR
Source: US Dept. of Commerce, Kantar Retail analysis, photo cred: splendidmarket
© Copyright 2014 Kantar Retail
34
THIS IS FUN…
It’s Like Sharper Image Built An “End Of The World” Stick
• https://www.youtube.com/watch?v=aFYs9zqYpdM
© Copyright 2014 Kantar Retail
35
Express Is Breaking Out
Walmart Express details:
• 10,000sq ft -15,000 sq ft, 11,000 –
13,000 SKUs
• Designed for urban & rural locations,
net 20 open to date, with expansion
plans ramping up in FY2015
“We are very, very pleased
with the topline.”
– Bill Simon, April 2014
Source: Company presentations, Kantar Retail analysis
© Copyright 2014 Kantar Retail
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In Rural Locations, Strong Results
“We have the best results in rural and the likes of suburban with pharmacy and
with gas, and that’s exciting for us, a very nice model there.” –Bill Simon, March 2014
Richfield, NC
Dunn, NC
Source: Company presentation, Kantar Retail store visits, analysis
Gentry, Ark.
© Copyright 2014 Kantar Retail
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The Store in the Larger Context
Manufacturer
Warehouse
Source: Kantar Retail analysis, store visits
Stores
Home
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FAST: BEST PRACTICE
• Small store expertise - developing skills in limited assortment,
small case pack and pack and logistics required to win
• Home delivery – leaning in with Amazon on deciphering its next
phase of logistics development
• Store navigation – thinking hard on helping shoppers find the
category/store – proximity-based marketing
© Copyright 2014 Kantar Retail
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KEY WORDS
• Demystify
• Rotate
• “Speed Is Life” = “Life Is Speed”
• Effectiveness
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EFFICIENCY: Is Contextual, Not Absolute
• Lowest unit cost is a nice outcome where the
world wants one thing
• When it doesn’t, it’s a hindrance
• Analogy here is digital marketing – today we
are all finding the efficiencies in something that
seemed fragmented and unfamiliar
• Online selling will be critical to your existing
customers not just “new” ones
• When retail and media collide we’ll all be back
here again!
© Copyright 2014 Kantar Retail
41
10 COMMANDMENTS:
1
The USA is a, polarized, old and young, increasingly urban, mobile
enabled multicultural, omnichannel place – are we ready?
2
Keyword 1: “SPECIFIC” – fact-based trading area level
understanding critical to winning in a complex, polarized world
3
Keyword 2: “MOBILE” Think 10:50:100 Digital Impact in small
screens
4
Keyword 3: “SHOPPER” - Shopper Marketing = “Point of Decision
Marketing” – Conventional Brand Marketing Becomes More
Shopper-Centric
5
Keyword 4: “POST-MASS” - Context and Personalization Win
© Copyright 2014 Kantar Retail
10 COMMANDMENTS PART 2: GET CLEVER
6
Keyword 5: “CONVENIENCE” – in retail, speed is life no matter
what format you run
7
Keyword 6: “LOYALTY” – transaction cards + attitudinal
understanding
8
Keyword 7: “EXPERIENCE” - great stores do something, not just
look great
9
Keyword 8: “VALUE” – pricing’s going to get weird
10
Keyword 9/10: “EXECUTION/ROI” – getting things done is the
difference between a business plan and a daydream
© Copyright 2014 Kantar Retail