Digital Retailing: The Accelerating Power &
Influence of Digital on Shopping Behaviors
Presented by:
Digital Retailing Webinar Series
Anne Zybowski, Vice President
Steve Mader, Director – Digital Retail
Laura Kennedy, Principal Analyst
November 22, 2013
Agenda
• The Amazon Growth Story, Cont’d
• Latest Business Model Innovation: API Drive
• Digital Influences on Holiday 2013
© Copyright 2013 Kantar Retail
3
Attendees will learn:
Atlanta, GA | December 10-12, 2013
Year End Forum
Winning Today, Preparing For Tomorrow
Attendees will learn:
• How to strengthen 2014 business
plans through quantitative &
qualitative forecasts and analysis.
• How to effectively compete in a
rapidly changing retail marketplace.
• How to best allocate resources to
win today while planning for the
future.
Session topics include:
• Where Is Purchasing Power Going
& How Are Retailers Responding
• Balancing Mass & Me At Walmart &
Target
• The Amazon Effect: Changing
Shoppers Everywhere
• The Shape Of Tomorrow In The
Economic Trends of Today
*Mention this webinar and receive 10% off your ticket.
© Copyright 2013 Kantar Retail
4
Talk about Disruption…
On way to #2 global retailer by 2017
KR Forecast 2013E
KR Forecast 2018E
1.
2.
3.
4.
5.
6.
7.
8.
9.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Walmart $489B
Carrefour $116B
Costco $108B
Tesco $106B
Kroger $98B
Schwarz Grp $93B
Seven & I $86B
Metro Group $85B
Amazon $78B
Walmart $605B
Amazon $179B
Costco $162B
Kroger $137B
Tesco $129B
Carrefour $129
Seven & I $114B
Schwarz Grp $110B
Metro Group $95B
Note: Chart in midst
of updates for YEF
Source: Kantar Retail database & analysis
© Copyright 2013 Kantar Retail
5
In a Way, Amazon is Already >$100B Retailer
Amazon Sales: not all from selling product
At ~10¢ on the
dollar for
“commission” on
3P Sales
$61.1B
$48.1B
$34.2B
$24.5B
15%
13%
10%
9%
% of Total Sales
~Represents third-party seller fees earned (including commissions) and related shipping fees, digital content subscriptions, and non-retail activities.
Source: Kantar Retail analysis; Company reports
© Copyright 2013 Kantar Retail
6
Amazon Wins Because of Its Focus on Shopper
Converting shoppers into repeat, loyal customers
Sales
$100B
Active Customer Accounts
$80B
+34M
+25M
+17M
$60B
+36M
200M
+36M – est
300M
236M est
250M
200M
164M
130M
$40B
$20B
$0B
“Avg.” annual
spend per
customer
55M
64M
76M
88M
150M
105M
100M
50M
$9B
$11B
$15B
$19B
$25B
$34B
$48B
$61B
$78B
2005
2006
2007
2008
2009
2010
2011
2012
2013E
$155
$167
$195
Source: Kantar Retail analysis; Company reports
$218
$233
$263
$293
$306
$330
0M
>2x avg.
customer
spend in 7
years
© Copyright 2013 Kantar Retail
7
Amazon Will More than Double in Next 5 Years
Substantial growth in N.A. and International as “rate” slows
Amazon Sales ($USD billions)
51%
North America
$178.9
18% CAGR
International
N. America Share of Sales
$134.9
56%
$19.2
$24.5
$34.2
8.9
10.2
11.7
12.8
15.5
18.7
2008
2009
2010
$61.1
$48.1
21.4
$77.8
62.9
51.9
42.4
33.7
26.3
53.0
62.6
72.0
2015E
2016E
26.7
34.8
44.0
2011
2012
2013E
2014E
2008-13
2013-18
30%
21%
34%
16%
CAGR
Source: Kantar Retail database & analysis
88.0
74.9
$114.5
$95.4
32% CAGR
$156.3
81.4
90.9
2017E
2018E
© Copyright 2013 Kantar Retail
8
Amazon Will Add Most $s of Growth in the US!!!
In the next 5 years… supplanting Walmart as #1
Rank / Retailer
1. Amazon
2. Walmart (excl. Sam's)
3. Kroger
4. Costco
5. CVS
6. Sam's Club
7. Walgreens
8. Apple
9. Home Depot
10. Dollar General
% of KR
Total Added
('13E-'18E)
Sales Added
('13E-'18E)
$
46.1
41.9
38.9
35.9
24.9
19.8
18.6
16.1
13.1
11.3
9.0%
8.7%
8.1%
7.4%
5.2%
4.1%
3.9%
3.3%
2.7%
2.3%
Top 10 Expansion Retailers
$
264.3
54.7%
All Other KR Chains in US
$
218.8
45.3%
Total KR Chains in US
$
483.0
100.0%
Total US ACV (Census Bureau)
$
1,016.8
* By sales added; USD billions
Source: Kantar Retail Analysis
n/a
Note: Chart in midst
of updates for YEF
© Copyright 2013 Kantar Retail
9
“Slowing” Growth Rate Is a Function of Scale
Source: Kantar Retail database & analysis
Market
© Copyright 2013 Kantar Retail
Annual Sales Growth
Sales $ Added (billions)
Amazon to add $8.5 – 9B per year
10
Another Way to Look at It…
Amazon adds another US Top 40 retailer each year
$10.9B
$10.4B
$9.4B
Estimated 2013 Annual Sales
© Copyright 2013 Kantar Retail
11
Amazon Fresh Drives Online Grocery
Competitive dynamics will accelerate response
Online Share of Food, Drugs, HBA
36%
CAGR
Up to 20 markets by end of 2014:
- San Francisco, any day
- Paris, ~8 weeks
- London, ~3 months
- More to come
Source: US Dept. of Commerce, Kantar Retail analysis, photo cred: splendidmarket
© Copyright 2013 Kantar Retail
12
Amazon Fresh Continues to Test & Learn
Business model and distribution model continues to evolve
Source: Kantar Retail analysis, company website
© Copyright 2013 Kantar Retail
13
Continuing to Innovate the Supply Chain/Fulfillment
Revolutionary = Routine, Sunday delivery?
Q1 launch,
Amazon Pantry
© Copyright 2013 Kantar Retail
14
Amazon’s International Growth
Strong Growth from Best Markets, still opportunity in
newer regions
$88.0B
$74.9B
$62.9B
$51.9B
$42.4B
$33.7B
$26.3B
$21.4B
$15.5B
$8.9B
$11.7B
Source: Company reports, Kantar Retail analysis
© Copyright 2013 Kantar Retail
15
© Copyright 2013 Kantar Retail
Revisting Amazon’s Methodical Category
Expansions
Source: Amazon
© Copyright 2013 Kantar Retail
17
Remember: Amazon is a Platform
Source: Amazon Websites
© Copyright 2013 Kantar Retail
18
Amazon’s Market Evolution
Source: Kantar Retail
© Copyright 2013 Kantar Retail
19
Amazon’s Evolutionary Status
Source: Kantar Retail
© Copyright 2013 Kantar Retail
20
Digging Deeper into the First Phase
Source: Kantar Retail
Supplier
POV
• Start to build into growth plans
• Moving towards resourcing the
account
• Internal struggle of future growth vs
current share
• Media Opportunity
• Anticipate third party disruptions
Retailer
POV
• Aggressive eCommerce innovation
if Category Specialist
• Your shopper’s share of mind will
be shifting to Amazon in categories
you may not sell, but seeds are
being planted
• General Merch first, and then
Consumables
© Copyright 2013 Kantar Retail
21
Agenda
• The Amazon Growth Story, Cont’d
• Latest Business Model Innovation: API Drive
• Digital Influences on Holiday 2013
© Copyright 2013 Kantar Retail
22
Quickly Changing the French Food Landscape
Drive is now “table-stakes”
As of June 1 2013, 2,278 drives in France with ~1,000
opening in the last year… expect over 2,800 by year-end
Source: Kantar Retail analysis, research
© Copyright 2013 Kantar Retail
23
More Innovation in “Convenience” from Auchan
API Drive… who needs a “store”?
Listening to shoppers
Innovating on behalf of shoppers
Source: Kantar Retail analysis, Company website
© Copyright 2013 Kantar Retail
24
A(Auchan) P(Proximity) to your I(Itenerary)
Auchan near your travels… who needs a “store”?
Pilot: Auchan Fâches Thumesnil
Villeneuve d’Ascq
http://www.youtube.com/watch?v=n8w3-BwB0b8
Source: Kantar Retail analysis, Company website
© Copyright 2013 Kantar Retail
25
Current Drive Footprint Near Faches-Thumesnil
Plus API pick-up locations
Vous souhaitez
proposer un nouveau
point de livraison:
- Votre enterprise,
- Association,
- Quartier,
- Résidence… ?
Source: Kantar Retail analysis, Company website
© Copyright 2013 Kantar Retail
26
During Week in Cities, Saturday in Villages
Source: Kantar Retail analysis, Google maps
© Copyright 2013 Kantar Retail
27
Key Takeaways
“Click & Collect” is truly in its infancy
• Shopper-centric retailers like Auchan continue to innovate their
model – redefining convenience
• Retailers fixated on leveraging existing assets are going to merely
see incremental growth with online – versus full potential
• No doubt, there is more innovation to come!
© Copyright 2013 Kantar Retail
28
Agenda
• The Amazon Growth Story, Cont’d
• Latest Business Model Innovation: API Drive
• Digital Influences on Holiday 2013
© Copyright 2013 Kantar Retail
29
Holiday Forecast: About Same as Last Year
But lower (by about ½ ppt) than Q3 pace
• Topline growth of 4% will be
driven primarily by online
sales gains
Breakdown of Topline Holiday Forecast
Q4 2013 Retail Sales Growth vs. Q4 2012
• Brick-and-mortar stores will
grow a percentage point
slower at 3%
• Online and other non-store
combined will grow 11%, but
online will grow even faster
* Store sales may include a small amount of online sales
** Topline measure is retail less auto, fuel, & food service channels
*** Other non-store includes catalogs and TV home shopping
Source: U.S. Department of Commerce, Kantar Retail analysis
© Copyright 2013 Kantar Retail
30
Shoppers Heading into the Season with
Similar Spending Outlook as Last Year
Amount Planning to Spend on Holiday Gifts Compared with Last Year
Note: Arrows indicate significant difference from previous year (95% confidence level)
Source: Kantar Retail ShopperScape®, September 2010, 2011, 2012, 2013
© Copyright 2013 Kantar Retail
31
Spending Plans Hold Steady Despite Myriad
Events with Potential to Derail Confidence
Amount Planning to Spend on Holiday Gifts Compared with Last Year:
September to October, 2013 vs. 2012
Source: Kantar Retail ShopperScape®, September and October 2012, September and October 2012 and 2013 © Copyright 2013 Kantar Retail
32
Fewer Shoppers Got an Early Start This Year
With late Thanksgiving, those starting in December is up
When Shoppers Plan to Begin Holiday Shopping, Sept. 2013
Between now and Halloween
7%
Between Halloween and Thanksgiving
20%
On "Black Friday"
11%
Sometime in early December
19%
Sometime in mid- to late-December
4%
Have Already Started
Fewer shoppers have started
their holiday shopping at this
point vs. last year
Sep-12
Source: Kantar Retail ShopperScape®, September 2013
Sep-13
© Copyright 2013 Kantar Retail
33
Significant Opportunity to Influence Shoppers
Remains: Only One-Fifth Have Set Plans
How Firm Are Holiday Plans, Sept. 2013:
Types of Gifts and Where Will Shop
Waiting to See What the
Deals Are + Haven’t
Thought About It Yet
Types of Gifts:
Where Will Shop:
Source: Kantar Retail ShopperScape®, September 2013
© Copyright 2013 Kantar Retail
34
Retailer Sets for Holiday Shopping Consolidating
Top Retailers Where Shoppers Plan to Shop (or Have Already Shopped)
for Holiday Gifts, September 2013
Shoppers indicate plans to
shop fewer retailers for
holiday gifts vs. last year,
with a notable dip for
shoppers planning to shop
Walmart.
Dollar stores and CE historically have
a big upside in actual shopping: more
ultimately shop than plan to initially
Note: Arrows indicate significant difference from previous year (95% confidence level)
Source: Kantar Retail ShopperScape®, September 2013
© Copyright 2013 Kantar Retail
35
Boomers Lean into Amazon for Stress-Free BF
Amazon one of top 5 retailer choices, except among Gen Y
Top 5 Retailers Planned to Shop on Black Friday
Gen Y
Gen X
Boomers
Have Nots
Haves
Parents
Walmart/ WMSC Walmart/ WMSC Walmart/ WMSC Walmart/ WMSC Walmart/ WMSC Walmart/ WMSC
(45%)
(41%)
(45%)
(43%)
(44%)
(55%)
Best Buy (40%)
Target/TGT (29%)
Amazon
(34%)
Target/TGT
(26%)
Target/TGT
(40%)
Target/TGT (36%)
Target/STGT (40%)
Amazon
(25%)
Target/TGT (32%)
JCPenney
(22%)
Kohl's
(34%)
Kohl's
(32%)
Kohl's
(26%)
Kohl's
(25%)
Kohl's
(31%)
Amazon
(22%)
Amazon
(33%)
Amazon
(26%)
JCPenney (24%)
Best Buy (19%)
Macy's
(26%)
Best Buy
(21%)
Best Buy
(29%)
Best Buy (21%)
Source: Kantar Retail ShopperScape®, October 2013
© Copyright 2013 Kantar Retail
36
Promotional Environment Might Dilute Impact of
“Real” Black Friday
Shoppers’ Attitudes about Black Friday: % Agree/Strongly Agree
(among all shoppers planning on purchasing holiday gifts)
Anticipate there will be lots of deals on
holiday gifts before Black Friday
“Black Friday” pricing no longer unique
to the “real” Black Friday
It’s poor taste for retailers to open on
Thanksgiving
Source: Kantar Retail ShopperScape®, September 2013
© Copyright 2013 Kantar Retail
37
Retailer Messaging Diverts Interest from BF Too
Particularly renewed emphasis on layaway, price match
Source: Retailer websites
© Copyright 2013 Kantar Retail
38
Nov 1 Kicked off Early Black Friday Merchandising
Amazon & Walmart out front
1
Source: Amazon.com
© Copyright 2013 Kantar Retail
39
Price Battles Heating Up Online, In-Store
Walmart begins price matching Black Friday today; will match
Walmart.com to brick and mortar competitors
Amazon
Toys: % Variance from Average Price
Week 1
Week 2
Week 3
(4.4)
(5.3)
(5.6)
Walmart
(3.4)
(3.0)
(5.7)
Target
(1.1)
(0.2)
0.6
Toys R Us
8.9
8.5
10.7
Walmart
and
Amazon
essentially
tied in
week 3
CE: % Variance from Average Price
Source: Walmart.com, Amazon.com, Goldman Sachs
Week 1
Week 2
Week 3
Amazon
(2.4)
(2.4)
(2.2)
Walmart
(0.6)
(0.3)
(0.9)
Best Buy
(0.4)
(0.2)
(0.5)
Target
3.4
2.9
4.0
Amazon
has led all
three
weeks
© Copyright 2013 Kantar Retail
40
How Are Retailers Using Digital This Holiday?
• Starting early online with free shipping offers
• Curating the selection to remove friction to
purchase
• Encouraging sharing of lists, gift ideas, product
reviews
Source: Kantar Retail research and analysis
© Copyright 2013 Kantar Retail
41
An Early Start: Free Shipping Wars Started in Oct.
Source: Retailer emails
© Copyright 2013 Kantar Retail
42
…and Continued into Early November
November 4
November 8
November 11
October 26
November 11
Source: Retailer emails
© Copyright 2013 Kantar Retail
43
Elsewhere in Multichannel: Target Launches
Buy Online, Pickup in Store
Guests connect across channels and link to the local store
• Rolled out to all US
stores by November
1st, 2013
• Guests can order
from mobile or
computer and pick up
same-day
Source: Kantar Retail research and analysis
© Copyright 2013 Kantar Retail
44
Curation: Pinterest Is the New List
Focused on personalized planning and triggers
Home Depot, Michael’s
recognize Pinterest’s
power in-store
Source: Kantar Retail store visits, Lowes.com
© Copyright 2013 Kantar Retail
45
Curation: An Endless Shelf…of Decorating Ideas
Linking in store experience to online engagement
Source: Kantar Retail store visits and analysis
© Copyright 2013 Kantar Retail
46
Curation: Nordstrom “Pop-In” Holiday Shop
Creates Urgency and Excitement
“Everyone has access to
everything at the same time
because of the Internet, and yet
they all want something special to
give.” –Olivia Kim, Nordstrom director
of creative projects
The Pop-In shops
are also in store
Source: Nordstrom.com
© Copyright 2013 Kantar Retail
47
Curation: Whole Foods + Etsy Partner to Create
Holiday Solutions Destination Online, In-Store
In-store tutorials
with local artists, a
Whole Foodsexclusive bag
Source: Etsy.com
© Copyright 2013 Kantar Retail
48
Kate Spade Encourages Sharing and Awareness
Gives shoppers the tools to market on its behalf
Wishlist can also broaden
shoppers’ awareness of Kate
Spade’s product selection
Source: KateSpade.com
© Copyright 2013 Kantar Retail
49
Sharing: Hashtags Gain Prominence as
Community-Builders Online
Retailers can use
them to track their
own trends—but
do they cede
ownership?
Source: Retailer emails, websites
© Copyright 2013 Kantar Retail
50
Sharing: Walmart Canada Baits Reviewers in the
Holiday “Recruitment Period”
Source: Walmart.ca email
© Copyright 2013 Kantar Retail
51
Digital Influence Holiday 2013
Takeaways… so far
• Retailers’ approaches to the holiday season exemplify
the cutthroat battle for share across retail. Early freeshipping offers and pre-Black Friday sales are retailers’
attempts to snag share before shoppers turn over their
shopping to Amazon.
• Personalization and curation through online tools are a
form of convenience in the hectic holiday season.
• Digital sharing mechanisms give shoppers the tools to do
the marketing for retailers as well as get validation of their
own purchases and wishes.
Source: Kantar Retail research and analysis
© Copyright 2013 Kantar Retail
52
Attendees will learn:
Atlanta, GA | December 10-12, 2013
Year End Forum
Winning Today, Preparing For Tomorrow
Attendees will learn:
• How to strengthen 2014 business
plans through quantitative &
qualitative forecasts and analysis.
• How to effectively compete in a
rapidly changing retail marketplace.
• How to best allocate resources to
win today while planning for the
future.
Session topics include:
• Where Is Purchasing Power Going
& How Are Retailers Responding
• Balancing Mass & Me At Walmart &
Target
• The Amazon Effect: Changing
Shoppers Everywhere
• The Shape Of Tomorrow In The
Economic Trends of Today
*Mention this webinar and receive 10% off your ticket.
© Copyright 2013 Kantar Retail
53
Contact:
Anne Zybowski
Vice President
anne.zybowski@kantarretail.com
Stephen MAder
Director
Stephen.mader@kantarretail.com
T:+1 617 912 2856
M:+1 646 345 4416
www.kantarretail.com
T:+44 0 2074502651
M:+44 0 7455234060
www.kantarretail.com
Laura Kennedy
Principal Analyst
Laura.Kennedy@Kantarretail.com
T:+1 617 912 2851
www.kantarretail.com
© Copyright 2013 Kantar Retail