The Age of Optimism to
The Age of Anxiety
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FMI Future Connect 2011
Growth Strategies
Thom Blischok
President, Global Innovation and Strategy
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Notice of Use of Information
“Opinions, estimates and projections in this presentation
and/or broadcast constitute the current judgment of the author
as of this date. They do not necessarily reflect the opinions of
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reader thereof in the event that any matter stated herein, or
any opinion, projection, forecast or estimate set forth herein,
changes or subsequently becomes inaccurate.
This presentation is provided for informational purposes only.”
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optimism and hope
● Job growth rate could double to 2.0M+ new jobs added.
● Majority of consumers believe that the economy will
pick up – however don’t know when.
● Internet commerce explodes as
shoppers “search for deals” as a
standard pre-buy practice.
● In traditional retailing “deals will reign”.
● Innovation centers on a new value
equation – HOT TREND – consumer
inquisitiveness.
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anxiety and concern
● $14T+ growing to $19.6T by 2015.
– US Treasury report to Congress
● The middle class is being squeezed out of existence.
– 64%+ of Americans now live paycheck to paycheck
● Household net worth continues to erode.
– $65T in late 2007 to $50T by April 2010
● One out of six Americans are
now on some form of assistance.
– 42.9M on food stamps
● The governmental debate shift.
– A focus from growth initiatives to a
reduction in spending
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balanced realities
● Consumer spending grows slightly with “pause before
purchase” as a “mainstay trend”
● Health and wellness becomes a solid new shopper
need – cost/benefit tradeoff
● Private brands continue with their “juggernaut”
● Pantries, medicine cabinets,
and beauty cabinets are
“trimmed” to the products
really used.
● The American family has learned
to “live with less” and are
surprisingly comfortable .
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our perspective
“Everyone is
being dealt the
same hand –
It is all about
how you play
your cards”
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shopping factoids
● 2.3 stores per week – primary and secondary
● 10 plus unique banners in a year – loyalty is now
about “deals and offers” – NEW TRIP ROUTE
● Purchasing closer to consumption – stocking up very
selectively
● Continuing to make “trade-offs”– national/private
brands, must to nice to have, multi-functional
● No money to buy a product that
could fail
● Value driven – convenience, price/
value relationship, assortment, service
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weekly average $90.24 to $98.40
Weekly Household Costs
Average Weekly Dollars Spent By Category
Weekly Average Shopper Expenses
Cost of Living
Changes
Food Staples and Meal
Ingredients
-2%
Health and Home
-2%
-2%
17%
6%
Snacking
Transportation
Entertainment
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integrated marketing/merchandising wins
Social Media
Aligned
WEBSITES
Relevant
Micro-Targeting
Total Store
Simplicity
Pharmacists
Nutritionists
Dieticians
Service
Needs Based
Flyers
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In-Store
Messaging
Shelf Labeling
Innovative
Packaging
Solutions
Regimens
buyer class scorecard analytics
Buyer Class Benchmarking – Grocery CPG Buyer Purchase Behavior
(Latest 52 Weeks)
Super
Heavy
Dollars per Buyer
Heavy
Medium
$4.5K $2.7K $1.3K
Light
$.3K
Purchase Trips Per Buyer
102
81
59
22
Average Number of
Categories Purchased
134
116
86
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Total Walgreens SH/H/M/L Buyer Groups Defined on 52-Week End 12/26/10: SH =Top 10%; H=Next 15%; M=Middle 50%; L= Light25%
Source: IRI Economic Shopping Behavior Longitudinal Database™, IRI Consumer Network™; Total Grocery
Time ©Period:
12 Months Ending 12/26/2010
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Strategies for Growth
Private Brand Innovation
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private brand factoids
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1
Shoppers See Solid Value in Private Brands
and Are Expected to Continue to Do So
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Private Brand Are Now “Good Enough” to
Include in the Core Consideration Set
3
There is a “Balancing Effect” Occurring in the
Household – National and Private
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Private Brands Are Projected to
Approach a 35 Share by 2015
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private brand growth dynamics
Key Department Dollar Share and Sales Percent Change
Total US – FDMxC: Calendar Year 2010)
General
Merchandise
9.8%
Beauty
1.8% Home Care
Beverages
1.2%
6.4%
Frozen
10.5%
Refrigerated
31.8%
General
Food
27.5%
Health
10.9%
Growth Categories
Sales Percent YOY Change
2009-2010
Refrigerated
3.9%
General Food
1.7%
Frozen
10.1%
Health
2.3%
General
Merchandise
-0.8%
Beverages
1.8%
Beauty
8.3%
Home Care
-5.3%
Time Period: Calendar Year 2010
Source: IRI Economic Shopping Behavior Longitudinal Database™, IRI Consumer Network™, IRI Liquid Data – Store – Total US FDMxC
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Private Brands
Strategies for Growth
Ron Bonacci
Vice President, Marketing
Food City
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PL brands value, everyday
● Top down commitment
● Different Brands bring different values
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integrated execution for growth
TECHNOLOGY
PROCESS
Growth
Pyramid
PEOPLE
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Strategies for Growth
Flavors Repositioned
Home Essentials Defines Regimens
Protein Breakfasts Power the Day
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Strategies for Growth
Flavors Drive Meat Sales
Randy Sullins
Vice President, Trade Relations
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flavor growth opportunity
72%
Meals prepared
at home
76%
Bored with the
same recipes
64%
Flavors reduce
boredom
Implication:
Drive flavor-based meal solutions, NOT ingredients
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Strategies for Growth
Household Essential Platforms
Bob Richardson
Director, Trade Relations
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essentials growth opportunity
Shoppers are purchasing
“around me” solutions
Only 1/3 of “essentials” shoppers
purchase >1 category each visit
Paper, laundry, trash bags, cleaners
>75% household penetration
Bleach/dilutables cleaners 210
consumption index with Hispanics
Every week, 8 million households
buy household essentials
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Strategies for Growth
Protein Breakfasts
John Whaley
Director, Strategy and Sales Operations
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protein breakfast growth opportunity
What Are
the Needs
Targetable
“Need State”
“Need State”
Participants
Need Gaps
Potential
Opportunities
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● Mom wants to provide her family with a
great tasting breakfast she feels good about
● Kids eat healthy and wholesome
● Kids well fed before out the door
● Cold/Hot Cereal
● Waffles/Frozen French Toast
● Yogurt
● Cereal/Energy Bars
● Give mom an option kids love to eat but
without the sugar and carbohydrates
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Strategies for Growth
Redefining Categories to
Departments
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winning shopper wallets
Shopper Essentials Check List to Drive Store Traffic
Top Ranking Categories by Application Type Based on total Number of Trips (All Outlets)
Time Period: 52-Weeks Ending 12/26/2010
Source: SIG Economic Shopping Behavior Longitudinal Database™, SIG Consumer Network™, Total CPG Syndicated Reviews
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diabetes a total store perspective
Total US Grocery: Category Index on Dollars per Buyer − Diabetes Shopper vs. All Shoppers
Only Categories with Dollar Sales Above $400M Considered
Fresh
to Go
Household, Office & Pet Supplies/
Greeting Cards – $3.6B
Express Checkout
Instant
Consumption
$6.6B
Health Care - $1.5B
Personal and Beauty Care - $0.6B
Meal Preparation/Supplements
Spirits, Liquor
and Wine $1.0B
Fresh Meat
Customer
Service
Photo
$.01B
ICE
Checkout
Frozen/Refrigerated
Frozen/Refrigerated - $9.9B
Meal Ingredients
Components
$11.5B
Produce $0.4B
Cigarette
$0.4B
Deli and Bakery
$1.7B
Time Period: Calendar Year 2010
Source:
IRI Economic Shopping Behavior Longitudinal Database™, IRI Consumer Network™, Total CPG, All Grocery Outlets
26 Copyright
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strategy to tactical implementation
Categories to Departments
Store Remodel and/or Expansion
Categories Mapped
to Shopper Needs States
Redesigned TOTAL
In-Store Communications
Took All In-Store Services
to Next Level
Redefined Value, Education,
and Convenience
“Slowed the Pace” of Shopping
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Strategies for Growth
Regimen and Solution Based
Merchandising
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Simple Meal
Planning &
Activation
Keith Olscamp
Campbell Soup Company
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Meal Time and Meal Planning Are Important,
Now More than Ever
● Households are increasingly eating at home
for many reasons
● Eating at home is perceived to be:
– Healthier
– Provide more quality time with family
– Proof that the meal preparer is the family nurturer
Health: 90%
Eating at Home =
Healthier
 At-home, Scratch
 At-home, Convenience
49%
47%
27%
33%
43%
42%
41%
19%
17%
15%
28%
29%
Family Time, Important +38%
1994
1997
2000
2003
2005
2009
Source: The 2009 Gallup Study of Cooking Knowledge & Skills; IRI Competing in a Transforming Economy, 2009
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Strategies for Growth
Health and Wellness Platforms
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shoppers evaluate your stores
Strategies Must Engage at Four Levels
Efficiency
Well
Being
Save
Time
Economic
Price
Winning
Zone
Save
Money
Social
Linkage
Experience
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Ego
Support
consultation, testing and immunizations
How to Increase Store Visits with Health and Wellness Services
Percent of Shoppers Willing to Increase Visits if Program Was Offered
48% 39% 32%
Personal consultation
with pharmacist
In-store health testing
and diagnostics
Source: SymphonyIRI Health and Wellness Trip Route Survey 2011, n = 1000
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Offer immunizations
Strategies For Growth
Be Well, Sell Well
Ric Noreen
Senior Director, Customer Growth
Kraft Foods
The Opportunity – Hitting The Sweet Spot
SHOPPER
RETAILER
BRAND
integrated execution for growth
TECHNOLOGY
PROCESS
Growth
Pyramid
PEOPLE
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redefining ads for growth
Evolving Positioning
Execution by Banner and/or Market
Less Products per Page
Multi-Manufacturer Promotions
Tied Together Themes
Healthier Living
Local Attachment
Clarity in Value Messaging
Today’s Realities
Unclear Value Positioning
Ad Density Creates Confusion
Random Acts of Promotion
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enlightened communications
LearnsomethingAbout™
On-line Consumer Education Programs
ShopperAssist™
The smarter in-store marketing tool
Prepare to Serve™
On-line associate development
Steve Roden
President & CEO
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f-commerce the fourth dimension
NEXT GENERATION RETAILING – NOW!
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Source: facebook.com websites
integrated execution for growth
TECHNOLOGY
PROCESS
Growth
Pyramid
PEOPLE
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people drive growth
How are you making
a difference?
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strategies for manufacturers and retailers
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1
Institute a Broad Sweeping Ongoing Shopper
Knowledge Base as a Core Competency
2
Be Open to Experiment with Store Based Innovation
to Change the “Pace of Shopping”
3
Segment Shoppers by “Needs and Usage Patterns”
4
Institute Health and Wellness “Solutions”
5
Develop Well Defined Value Creation Strategy
6
Focus on Shopper Centric Retailer/Supplier
Collaboration STRATEGICALLY not tactically
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Final Thoughts
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final thoughts
“Denial is a sure “Think outside
way to get eaten”
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the box”
“Change the
“Failure is not
rules of the game””
an option”
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