Retail Trends That Matter
June 12, 2012
Todd Hale
SVP, Consumer & Shopper Insights
1
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Table of Contents
• Economic Trends
• Buying Trends
• Retail Trends
• Consumer Trends
• 2016 Channel Forecast & Predictions
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Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Economic
Update
3
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Markets & consumers driven by uncertainty
HOME PRICES
EQUITY MARKETS
FUEL COSTS
LABOR MARKETS
INFLATION
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Source: Yahoo Finance; DQNews; ChicagoFed.org; EIA.gov
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
1/3rd buying gas linked to grocery spending
Are you …buying more gas at locations because of incentives tied to
spending levels at GROCERY store where you shop?
Yes
'05
'06
'07
'08
'09
'10
'11
'12
NA
NA
19%
21%
25%
24%
28%
32%
5
Source: Nielsen Homescan Surveys; Stop & Shop
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Buying
Trends
Competition heats up!
6
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Inflationary pressures driving growth
Dollar Sales % change vs. year ago
10
7
3
Dairy*
5
Fresh Produce*
5
Alcoholic Bevs
5
4
Fresh Meat*
Packaged Meat*
Dry Grocery
*Big growth in
departments
where prices
have
risen to cover
increased input
costs
HBA
3
Frozen Foods
3
Deli
Non-Food Grocery
2
General Merch
1
4
Total All Depts
Source: Nielsen Scantrack, Total U.S. AOC
52 weeks ending 5/12/2012 (vs. prior year); UPC-coded
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Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Consumers making trade-offs or buying less
in 6 of 11 major departments
Unit Volume % change vs. year ago
Alcoholic Bevs
6
Fresh Produce
3
HBA
2
Fresh Meat
2
Deli
Packaged Meat
-1
Dry Grocery
-1
Non-Food Grocery
-1
Dairy
-2
Frozen Foods
-2
General Merch
Total All Depts
Consumers
making tradeoffs or buying
less
0
-3
-1
8
Source: Nielsen Scantrack, Total U.S. AOC
52 weeks ending 5/12/2012 (vs. prior year); UPC-coded
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Inflationary pressures driving dollar growth
in perimeter – only volume growth in deli
Deli
Prepared
Foods
8%
Deli
Cheese
Fresh Meat
Fruits
Bakery
Fresh
Seafood
Deli Meat Vegetables
8%
6%
5%
5%
4%
3%
3%
3%
2%
0%
0%
-1%
-2%
-3%
-4%
Dollars % Change vs YAGO
Volume % Change vs YAGO
Source: Nielsen Perishables Group FreshFacts®,
Total U.S. – Traditional Grocery; 52-weeks ending 03/31/2012
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Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Soaring
Temperatures
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Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
These categories accounted for 71% of
losses; 8 of 16 cold weather categories
Absolute Unit Change (millions)
-1,952
-213
-141
-125
-121
Cold weather categories
-109
Warm weather categories
-86
Price impact
-80
Promotion impact
-80
-79
-75
Losses in 50 of 64 major categories:
-54
• 58% cold weather categories
-52
• 58% > average price increase
-51
• 72% > average promotion decline
-45
-43
-41
Total Food & Non-Alcoholic Beverages
Vegetables-Canned
Carbonated Beverages
Soup
Juices Drinks-Shelf Stbl
Yogurt
Prepared Foods-Frozen
Cereal
Seafood-Canned
Bread & Baked Goods
Milk
Condiments/Gravies/Sauce
Pizza/Snacks-Frozen
Fruit-Canned
Pasta
Prepared Foods-Rdy Serve
Packaged Meat
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Source: Nielsen Scantrack, Total U.S. - All Outlets Combined; UPC-coded;
29 weeks ending 4/14/12 vs. 29 weeks ending 4/16/11
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
14 categories gained & 8 were warm
weather categories
Absolute Unit Change (millions)
Total Food & Non-Alcoholic Beverages
Candy
Fresh Produce
Bottled Water
Snacks
Coffee
Tea
Cookies/Ice Cream Cones
Dessert/Fruit/Tops-Froz
Salad Dressings/Mayo/Top
Snacks/Spreads/Dip-Dairy
Eggs-Fresh
Baking Supplies
Sugar/Sugar Substitutes
Ice
682
217
165
105
61
33
31
18
10
9
9
6
6
6
4
Gains in 14 of 64 major categories:
• 8 warm weather categories
• 8 gained despite price impact
• 4 gained despite promotion impact
Cold weather categories
Warm weather categories
Price impact
Promotion impact
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Source: Nielsen Scantrack, Total U.S. - All Outlets Combined; UPC-coded;
29 weeks ending 4/14/12 vs. 29 weeks ending 4/16/11
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Retail
Trends
Competition heats up!
13
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Drug & Small Box dominate list of chains
adding most stores
Increases in actual U.S. Store Counts – 2011 versus 2007
Walgreens
Dollar General
7 Eleven
CVS/Caremark
Dollar Tree
Family Dollar
Couche Tard
Walmart Banner
Valero
Aldi
Casey's
Shell
Target
Sunoco
Pilot Flying J
Tesco USA
Publix
Save-A-Lot
Loves
Delhaize
1733
1647
1067
1057
945
687
548
270
268
263
222
204
178
168
167
163
127
114
79
79
C-Store
Dollar
Drug
Grocery
Mass
14
Source: Nielsen TDLinx
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Walmart’s small formats in U.S. & Canada
Canadian Grocer magazine reported on Jan. 27, 2012—
“Walmart Canada opened its prototype small
urban Supercentre… in Scarborough, an eastend suburb of Toronto. The format–which
company insiders call “Urban 90” because the
store’s footprint is 90,000 square feet–allows
Walmart to build Supercentres on half the land
normally required. (The largest traditional
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Supercentres top 200,000 square feet.)”
Source: Walmart, Arkansas Online, WBEZ, Canadian Grocer
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
“more than 2,000 people were in line prior to
the 7 a.m. opening”
1/3rd of Wegmans’ new store
devoted to prepared foods, 15k
liquor dept & 300-seat café
“70,000 products, including
300 cheeses, 700 varieties of
fruits and vegetables and
2,500 varieties of wine.”
16
Source: Facebook (Tobias Biedenkopf) & allevatoarchitects.com
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Retail channel lines continue to blur & food is
a major ingredient
17
Source: Company websites
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
It’s just not about the food: Kroger adds
Bombay line & H-E-B opens pop-up toy stores
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Source: Kroger’s Fred Meyer & Facebook.com/BombayCompany
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
•Media &
Communications
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Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Aldi turns the page; improves technology
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Source: Aldi
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
ShopRite cooking on YouTube; monthly
recipes feature store brands
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Source: YouTube.com/user/ShopRiteStores
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
When designing ads, the smart money is on
use of humor, narrative & sentimentality
2006 - 2007
2008 - 2009
2010 - 2011
Pre-recession
Recession
Recovery
Advertising Performance Index Since 2006
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Source: Nielsen Ad Solutions
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Product innovation & innovative
communication messaging & vehicles
Photo Caption: “The actor Terry Crews interrupting a
commercial for Charmin Freshmates to pitch Old Spice body
spray. While cobranding isn't new, one real commercial
commandeering another may be.”
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Source: The New York Times, Facebook & YouTube
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Whole Foods launches a new online lifestyle
magazine
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Source: Whole Foods’ Dark Rye Online Magazine
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Less trust in online & mobile ads
To what extent do you trust the following forms of advertising?
Recommendations from people I know
Consumer opinions posted online
Editorial content such as newspaper articles
Emails I signed up for
Branded websites
Ads in newspapers
Ads on TV
Ads in magazines
Ads on radio
Brand sponsorships
Ads before movies
Billboards and other outdoor advertising
TV program product placements
Ads served in search engine results
Online video ads
Ads on social networks
Online banner ads
Display ads on mobile devices
Text ads on mobile phones
Trust Completely
27
10
7
7
9
7
6
7
6
8
5
6
6
4
4
6
4
5
6
Trust somewhat
64
58
54
48
43
41
41
40
40
33
36
35
30
32
29
27
25
22
20
6 3
23
9
30
9
35
10
38
10
42
11
41
12
41
12
41
12
46
14
45
14
46
13
49
15
47
17
49
19
47
21
50
21
46
27
46
28
Don't trust much
Don't trust at all
25
Base: All respondents n=501
Source: Nielsen Global Online Survey – Q3 2011
(Percentage of U.S. respondents)
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Convenient
Consumer
Solutions
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Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
The convenient art of gifting
“Gift Card Mall reaches more than 165 million people each week
through an exclusive network of leading grocery, big box, convenience,
drug and specialty stores, and is available through leading Internet
retailers and a proprietary site, GiftCardMall.com.”
Source: Blackhawk Network (quote);
TribLocal & Facebook.com/GiftCardMall (photos)
27
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Amazon’s Subscribe & Save: How are
traditional retailers feeling the pinch?
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Source: Amazon.com
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Peapod brings virtual grocery shopping to
train stations in Philadelphia & Chicago
Forbes reported on
May 4, 2012—
“The average Peapod
shopper spends $160 per
order on the Internet…
Those who shop exclusively
using a mobile device —
and that includes tablets —
spend $165 per order. But if
shoppers use both online
and mobile in some
combination, they spend
$168 per order.”
29
Source: Peapod & Forbes
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Retail 2016 – what’s in store?
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Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
E-commerce, club, dollar, supercenters &
pet the big winners
CAGR 2010 to 2016
E-Commerce
Club
Dollar
Supercenters
Pet
Drug
Conv/Gas
Supermarkets
Liquor
Discount Dept
Sporting Goods
HHI
Department
Auto
Home, Bed, Bath
Office
Apparel
Electronics
Books
Toy
Mass Merch
8.5
4.9
4.8
4.6
4.1
2.7
2.1
1.5
1.2
0.4
0.3
-0.1
-0.4
-0.5
-0.5
-0.5
-0.8
-0.9
-1.1
-1.7
-3.0
Forecasted
to lose share
31
Source: Nielsen TDLinx &
Nielsen Analytics
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Predictions
32
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Who will be next to close their doors or be
acquired? It will be a busy next 4 years!
33
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Starbucks continues quest to bring
innovation & quality products to consumers
As reported in Starbucks’ shareholder meeting
on Mar. 21, 2012—
• announced its first at-home premium
single cup machine
• opened Evolution Fresh retail location
(juice bar), hoping to attract well-to-do
• opened new Seattle’s Best Coffee
concept store to build its Hispanic
customer base
• entered the energy category
with Starbucks Refreshers™
beverages
34
Source: Starbucks & Chicago Tribune/Andrew A. Nelles (photo)
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
How will these companies enhance or
disrupt the future of your retail space?
35
Source: Fast Company
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Walmart makes improvements to Facebook
app to magically find perfect gift for friends
The site includes improved product
recommendations; expanded selection from over
100 sites, including Disney, Nordstrom and Think
Geek; and birthday reminders
36
Source: Walmart
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Other things to watch – format evolution
• High-end versus low-end – middle-ground suffers
• “Retailtainment” & “no-frills” drives store experience &
design
• Solution-selling store-design a key differentiator
• Format blurring: big-box add smaller formats & smaller
formats add larger; food retailers sell more non-food & nonfood retailers expand food
• Winners will align formats, assortment, promotions &
communication with shopper demand
37
Trends That Matter
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
Thank You
todd.hale@nielsen.com
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Copyright © 2012 The Nielsen Company. Confidential and proprietary.