Club Change Drivers & Supplier Responses:
Where’s the Work?
Presented by:
Sara Altukhaim
Director
US Club Channel Webinar
Copyright © 2014 Kantar Retail. All Rights Reserved.
501 Boylston Street, Suite 6101, Boston, MA 02116
(617) 912- 2828
howard.zimmerman@kantarretail.com
No part of this material may be reproduced or transmitted in any form or by any means, electronic or
mechanical, including photography, recording, or any information storage and retrieval system now known
or to be invented, without the express written permission of Kantar Retail.
The printing of any copies for back up is also strictly prohibited.
Disclaimers
The analyses and conclusions presented in this seminar represent the opinions of Kantar Retail. The views
expressed do not necessarily reflect the views of the management of the retailer(s) under discussion.
This seminar is not endorsed or otherwise supported by the management of any of the companies covered
during the course of the workshop or within the following slides.
© Copyright 2014 Kantar Retail
Agenda
• Club Suppliers: Benchmarks & Best Practices
• Club Shoppers: The Online Club Shopper
© Copyright 2014 Kantar Retail
3
Overview: Online Survey of 52 Club Suppliers
Fielded Feb – Mar 2014
Company’s Annual Global
Sales Volume (USD)
Total = 52
23%
15% 15%
4%
6%
15%
14%
8%
Club Product Departments
Edible Dry Grocery
Health and Beauty Care (HBC)
General Merchandise
Frozen
Non-edible Dry Grocery
Pharmacy
Baby/toddler
Dairy
Pet
Toy
Behind the Counter OTC
Deli
Meats
Beer/Wine/Spirits
Consumer Electronics
Non-Alcoholic Beverages
Produce
Other
Total
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
43%
25%
21%
18%
16%
16%
14%
11%
11%
7%
5%
5%
5%
2%
2%
2%
2%
2%
44
© Copyright 2014 Kantar Retail
4
Overall Growing Importance Attributed to Club
How has club importance to your company
changed over the last year?
Less Important
No Change
More Important
34%
63%
59%
59%
57%
35%
2%
Club channel
35%
35%
6%
7%
9%
Costco
Sam's Club
BJ's Wholesale
Total=52
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
5
Clubs Rank #2 – Up from Last Year
Most
Important
=8
Channels Ranked by Order of Importance to
Company's Business Volume
Rating Average
Mass
7.4
Warehouse Club
6.1
Grocery
6.0
4.8
Value Discounters
Chain Drug
4.5
Convenience
Online (Non-Store) Retailers
Category Specialists
4.0
3.8
3.2
Least
Important
=1
Total=52
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
6
Club Team Structures: Who Does Your Club
Team Report Into?
Sam's Club
Walmart head
Costco
“Alternative” channel head
Club channel head
Sam's Club
BJ's Wholesale
22%
43%
22%
35%
36%
43%
43%
57%
64%
35%
Total=39
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
7
More Resources Overall Devoted to Costco
Of the staff dedicated to your company's [Club] team, which of
the following roles are represented? (select all that apply)
100%
100%
100%
Sales/Customer Management
Finance
50%
Marketing
Supply Chain
73%
70%
65%
60%
53%
65%
40%
Consumer/Shopper Insights
Other
60%
53%
Category Management
Data Management/IT
70%
77%
47%
42%
7%
BJ's Wholesale
Sam's Club
Costco
67%
30%
19%
8%
Costco=26, Sam’s Club=15, BJ’s Wholesale=10
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
8
Club Team Investments Vary Widely by Retailer
Internal resources added versus prior year
Team Head Count 83%
New Positions
81%
Funding/Financial
Resources
74%
Senior Management
Buy-In
72%
Product
Development
72%
Senior Management
Buy-In
72%
Funding/Financial
Resources
71%
New Capabilities
71%
Senior Management
Buy-In
38%
New Capabilities
24%
Funding/Financial
Resources
23%
Product
Development
21%
Product
Development
69%
Team Head Count 33%
Team Head Count 8%
New Capabilities
65%
New Positions
25%
New Positions
6%
58%
No Resources
Gained
53%
No Resources
Gained
68%
No Resources
Gained
Total=43
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
9
Satisfaction with Club Business
How satisfied are you with the
success of your [Club] business
within your company today?
19%
7%
13%
Compared to last year, how has your
satisfaction with your company’s
business at [Club Retailer] changed?
4%
7%
9%
19%
73%
56%
69%
19%
Not at all
Satisfied
Somewhat
unsatisfied
Somewhat
satisfied
Extremely
satisfied
33%
Sam's Club
74%
69%
BJ's
Wholesale
91%
9%
13%
18%
13%
27%
50%
27%
52%
18%
Costco
13%
4%
Costco
56%
13%
18%
Sam's
Club
BJ's
Wholesale
63%
Strongly
decreased
Somewhat
decreased
Stayed the
same
Somewhat
increased
Strongly
increased
46%
Costco=27, Sam’s Club=16, BJ’s Wholesale=11
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
10
The Internal Club Sell: You Are Not Alone
What are your company’s biggest internal obstacles to effectively
selling club today? (select all that apply)
Cost of customization is difficult to rationalize
65%
Club is not effectively embedded into product innovation
and development
Concerns about diluting the integrity of our brand(s) in a
club environment
58%
37%
True profitability is hard to explain or difficult to measure
35%
Lack of shopper insights support
33%
Key constituents lack necessary understanding of the
club model
33%
Lack of club-specific P&Ls
28%
Existing supply chain does not support logistics
necessary for effective club items
23%
Lack of marketing support
Club team(s) are not effectively structured
Other
21%
19%
14%
Total=43
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
11
Private Brand Growth: Helping or Hurting?
How has the number of [Club Private
Brand] items changed over the past
year in your category(ies)?
9%
4%
12%
8%
29%
How has the presence of [Club
Private Brand(s)] affected your
performance?
27%
10%
10%
29%
N/A
39%
14%
9%
Increased a lot
Depends on the
category
39%
Very positively
9%
Somewhat
increased
14%
Somewhat
positively
60%
57%
Stayed the same
Not at all
30%
39%
55%
43%
Somewhat
decreased
Somewhat
negatively
10%
Decreased a lot
17%
4%
Costco
Sam's Club
BJ's
Wholesale
Costco
Very negatively
10%
14%
Sam's Club
BJ's
Wholesale
Costco=26, Sam’s Club=14, BJ’s Wholesale=11
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
12
Main Club Concerns Moving Forward*
Sam’s Club
Costco
BJ’s Wholesale
• Push for exclusivity/
innovation without guarantee of
placement or commitment
• Loss of strategic focus with
reduced growth and more oneway supplier partnership
• Lack of strategy overall given
the change in leadership
• Less space for national brands
• Interaction with suppliers:
“Beating up" over price but
failing to "collaborate" and/or
make insights-based decisions
• Overall direction as a
company: Not knowing who it
wants to be in 5-10 years keeps
others from committing
• Price: being competitive
• [Lack of] level playing field on
competing items (i.e., different
levels of what is deemed
successful depending on brand
and what buyer wants)
• Very slow decision making
• No interest in insights/research
• Lack of items supported for full
distribution across regions
• Global pricing demands that
disrupt brand and local P&L in
[international] markets
• Fewer SKUs in the category
• Business member decline
• Kirkland Signature depreciating
national brand value
• Regional buying structure
inefficient
• Globalization commanding
more time and influence beyond
scope of responsibilities
• Increasing focus on the
Advantage Member (via
assortment, messaging, promo
items, etc.) to detriment of
Business members
• Demands for differentiation
versus the marketplace and
other club retailers
• Changing strategy resulting in
no way to participate in ISB
• Central/South Am. strategy
resulting in selling at/below cost;
Walmart promoting club packs
• Inconsistent strategy
• More collaboration needed for
overall strategic growth initiative
• Decreasing or delayed
seasonal traffic and shopper
footsteps in clubs
• Logistical system
incongruencies
• Volume and Pricing
*Per qualitative feedback from suppliers of each club
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
13
Length of Strategic Plans: Majority Are 1-3 Years
To the best of your knowledge, what is the length of the
strategic plan that you have in place with [Club] today?
70%
60%
50%
40%
30%
20%
10%
0%
Less than
a year
Costco
7%
Sam's Club
19%
BJ's Wholesale
9%
1-year
2-year
3-year
5-year
30%
31%
64%
19%
25%
0%
22%
13%
9%
11%
6%
9%
6-plus
years
0%
6%
0%
None
11%
0%
9%
Note: No four-year plans reported by respondents
Costco=27, Sam’s Club=16, BJ’s Wholesale=11
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
14
Globalization Increasingly Key to
Strategic Alignment with Costco
“We will continue
to sell to Costco's
global markets
through our inmarket
representatives.”
Other
8%
Globalizing
with Costco is
not currently a
priority
35%
A strategic plan
to expand our
global
penetration
with Costco is
already in
place
19%
We are in the
process of
formalizing a
global
expansion
strategy
38%
Costco=26
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
15
Highest % in Individual Club
Highest % Across All Clubs
Notable YOY Change
Club Receptivity to Key Initiatives
Which club has been most receptive to your
involvement in the following activities?
Expanding offer(s) beyond US to global markets
Customizing exclusive packs
Launching product(s) not yet available elsewhere
Integrating Health & Wellness
Co-branding with club private brand(s)
Producing private label club product(s)
Improving sustainability of packaging
Improving sourcing of product ingredients
Acquiring new members
Appealing to Gen Y
Developing multi-vendor packs
Increasing product pricing
Sharing consumer insights data
Analyzing membership data from the club
Conducting in-club research
Appealing to businesses
Participating in club mobile app
Incorporating mobile codes on packs
Participating in club Facebook initiatives
Engaging consumers via non-retailer blogs
Participating in club Twitter initiatives
Participating in club Pinterest initiatives
Costco
Sam's Club
BJ's Wholesale
62%
2%
29%
15%
24%
7%
10%
22%
5%
29%
15%
17%
12%
0%
7%
7%
7%
5%
0%
5%
0%
2%
0%
0%
5%
51%
21%
40%
43%
48%
18%
7%
20%
17%
15%
10%
12%
5%
0%
3%
5%
7%
2%
5%
2%
57%
44%
41%
40%
38%
37%
35%
29%
22%
20%
17%
16%
14%
12%
12%
10%
7%
7%
5%
0%
0%
Total=44
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
16
Participation in Costco Initiatives
Instant Savings coupon in MVM
Exclusive item development
In-club demo/sampling
Stand-alone Instant Savings
MVM (Multi-Vendor Mailer) coupon
Member insights
Tie-in with Kirkland Signature
Member emails through Costco
Sustainability messaging
Prospective member Insights
Costco Online
Co-branding or private brand production
General price reduction
Business member appeals
Endcap
Tie-in with other national brands
Online samples
Free online delivery
Road Show
The Costco Connection
Tie-in with Costco Service(s)
Costco-relevant social media
Mobile text alerts/offers through Costco
Fence (cart rail) program
46%
44%
4%
4%
28%
27%
27%
24%
20%
4%
20%
4%
20%
4%
17%
4%
17%
4%
17%
8%
16%
4%
12%
4%
8% 12%
8% 12%
4% 8%
4% 8%
4% 8%
8% 12%
12% Less Involved
4%
4%
4%
4%
4%
4%
4%
4%
8%
8%
8%
8%
Instant Savings,
Exclusives,
Demos,
Coupons &
Insights on rise
More Involved
Less Involved
Costco=26
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
17
Satisfaction with ROI of Costco Efforts
Instant Savings coupon in MVM
MVM (Multi-Vendor Mailer) coupon
Stand-alone Instant Savings
Exclusive item development
Endcap
In-club demo/sampling
Member insights
Sustainability messaging
General price reduction
Costco Online
Co-branding or private brand production
Tie-in with Kirkland Signature
Business member appeals
The Costco Connection
Fence (cart rail) program
Tie-in with other national brands
Member emails through Costco
Road Show
Prospective member Insights
Costco-relevant social media involvement
Free online delivery
Tie-in with Costco Service(s)
Mobile text alerts/offers through Costco
Online samples
75%
67%
57%
13%
54%
8%
54%
21%
54%
17%
42%
4%
33%
4%
33%
4%
30%
4%
26%
9%
26%
4%
25%
4%
25%
29%
25%
8%
21%
4%
17%
17%
13%
4%
8%
4%
8%
4%
4%
4%
4%
Somewhat/Very Satisfied
Not at all/Not too Satisfied
Costco=24
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
18
Participation in Sam’s Club Initiatives
Member insights
Sam’s Instant Savings Book (ISB)
Exclusive item development
General price reduction
Stand-alone Instant Savings
Joint Business Planning
Sam’s Club Online
Sustainability messaging
Member emails through Sam’s Club
Endcap(s)
Co-branding or private brand production
Tie-in with other national brands
Prospective member insights
Business member appeals
Tie-in with Sam’s Club Service(s)
Mobile text alerts/offers
Free online delivery
In-club demo/sampling
Healthy Living Made Simple Magazine
Cart Rail/WOW wall program
Road shows
50%
43%
7%
7%
29%
29%
25%
21%
21%
21%
15%
14%
14%
14%
7%
14%
7%
7%
7%
7%
7%
7%
7%
7%
7%
Insights, ISB,
Exclusives,
Pricing
Reductions,
among others,
on rise
More Involved
Less Involved
7%
Sam’s Club =14
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
19
Satisfaction with ROI of Sam’s Club Efforts
Endcap(s)
Tie-in with other national brands
Cart Rail/WOW wall program
Joint Business Planning (JBP)
Sam’s Instant Savings Book (ISB)
Member insights
Business member appeals
General price reduction
In-club demo/sampling, excluding Freeosk
Stand-alone Instant Savings
Sustainability messaging
Prospective member insights
Exclusive item development
Member emails through Sam’s Club
Healthy Living Made Simple Magazine
Free online delivery
Sam’s Club Online
Co-branding or private brand production
Sam’s-relevant social media involvement
Mobile text alerts/offers
Road shows
Freeosk
Simply Delicious Meals
Tie-in with Sam’s Club Service(s)
Tie-in with Sam’s Club private brand(s)
Online samples
15%
23%
23%
8%
8%
8%
8%
9%
9%
8%
8%
54%
50%
45%
38%
38%
15%
38%
33%
25%
33%
25%
33%
25%
33%
33%
33%
23%
31%
38%
31%
17%
25%
23%
36%
18%
17%
25%
17%
25%
17%
17%
17%
17%
Not at all/Not too Satisfied
Somewhat/Very Satisfied
Sam’s Club =13
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
20
Participation in BJ’s Wholesale Initiatives
In-club coupons or instant savings
40%
10%
40%
BJ’s Big Brand Mailer (BBM)
30%
In-club demo/sampling
22%
General price reduction
20%
Endcap(s)
Exclusive item development
11%
Tie-in with other national brands
11%
Tie-in with BJ’s private brand(s)
11%
BJ’s-relevant social media
11%
BJ’s Member Journal
11%
Prospective member insights
11%
Member insights
10%
More Involved
Less Involved
22%
BJ’s Wholesale=10
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
21
Satisfaction with ROI of BJ’s Efforts
78%
BJ’s Big Brand Mailer (BBM)
70%
In-club coupons or instant savings
50%
Endcap(s)
BJ’s Member Journal
In-club demo/sampling
11%
Member insights
11%
40%
30%
33%
33%
22%
11%
13%
Somewhat/Very Satisfied
Exclusive item development
11%
Not all/Not too Satisfied
General price reduction
Tie-in with other national brands
11%
11%
11%
Tie-in with BJ’s private brand(s)
11%
Cart Rail program
11%
Member emails through BJ’s
10%
Free online delivery
10%
BJ’s-relevant social media
11%
Prospective member insights
Sustainability Messaging
BJ’s Wholesale=10
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
22
Implications: Use This Data to Elevate and
Empower Your Club Teams
• Build more club buy-in among company leadership.
If club importance isn’t growing at your company, what’s the hold up?
• Make the case for more resources.
What investments are your peers making that you’re not?
• Get past the “alternative” mindset.
Are your club teams still reporting to an “alternative” channel head?
• Approach each club with a long-term plan.
Do your Costco, Sam’s, and BJ’s teams still lack a formal, forwardlooking strategy?
• Get global with Costco (at least consider it).
Why wait until its too late? You will get left behind.
• Provide direction and differentiation.
Sam’s and BJ’s need some guidance. Why not step up before one of
your competitors does?
Source: Kantar Retail analysis of Kantar Retail's Annual Club Vendor Benchmarking Survey (March 2014)
© Copyright 2014 Kantar Retail
23
Agenda
• Club Suppliers: Benchmarks & Best Practices
• Club Shoppers: The Online Club Shopper
© Copyright 2014 Kantar Retail
24
Top 20 Retailer Web Sites Shopped
BJ's Wholesale
All Shoppers % shopped
Web site
Amazon.com
eBay.com
Walmart/Walmart Supercenter
Best Buy
Kohl's
JCPenney
Barnes & Noble
Target/SuperTarget
Macy's
The Home Depot
Lowe's
Apple
Toys "R" Us/Babies "R" Us
Sears
Old Navy
Bed Bath & Beyond
Staples
Bath & Body Works
QVC TV or QVC.com
Zappos.com
Nordstrom
Costco
Sam's Club
BJ's Wholesale Club
50%
20%
12%
9%
8%
8%
8%
8%
7%
6%
6%
5%
5%
5%
4%
4%
4%
4%
4%
4%
2%
2%
2%
0%
60%
23%
13%
13%
12%
11%
12%
11%
10%
9%
8%
8%
9%
7%
6%
8%
9%
6%
8%
7%
4%
3%
2%
7%
Rank
1
2
4
3
5
8
6
7
9
12
14
16
11
17
21
15
10
20
13
19
18
Costco
% shopped
Web site
62%
25%
12%
13%
11%
9%
11%
11%
12%
9%
8%
10%
7%
6%
6%
7%
6%
5%
6%
8%
6%
13%
2%
1%
Sam's Club
Rank
1
2
6
4
9
11
8
7
5
12
14
10
15
21
20
16
18
24
17
13
19
3
% shopped
Web site
57%
26%
18%
12%
12%
12%
10%
10%
9%
8%
9%
7%
8%
7%
6%
7%
6%
6%
7%
6%
3%
2%
10%
1%
Rank
1
2
3
4
6
5
9
8
10
12
11
16
13
15
19
17
21
18
14
20
7
*Read as: Among the 6000 shoppers surveyed in 2013 who said they usually shop at Sam's Club every month, 57% had shopped at Amazon.com during the past four weeks.
All Shoppers=48224, monthly BJ’s shoppers=2056, monthly Costco shoppers=6410, monthly Sam’s Club shoppers=6000
Source: Kantar Retail ShopperScape®, January-December 2013
© Copyright 2014 Kantar Retail
25
Members Prefer Online for “Hunt,” Convenience
Preference for In-Store vs. Online Shopping, by Shopping Mode
(among monthly warehouse club shoppers)
Prefer in-store
Prefer online
Hunting for unique bargains
Buying goods in the fastest and most convenient
way
Shopping at a retailer to discover new things
Looking to a retailer for advice on how to do things
or get help solving problems
46%
54%
50%
50%
64%
68%
36%
32%
Shopping at a retailer because it reflects how I
express myself and my lifestyle
72%
28%
Shopping for products that need to be replaced on
a routine basis
74%
26%
Note: Arrows indicate significant difference vs. all shoppers (95% confidence level)
All shoppers=4049, Club shoppers=1161
Source: Kantar Retail ShopperScape®, July 2013
© Copyright 2014 Kantar Retail
26
Though Preference for Online Shopping Varies by
Monthly Club Shopper Segment
Gen Y
Gen X
Boomers
Seniors
63%
57%
52%
46%
57%
48%
49%
37%
40%
36%37%
30%
37%
35%
31%
24%
34%
30%
27%
19%
28% 28%
25%
21%
Hunting for unique Buying goods in
Shopping at a
Looking to a
Shopping at a
Shopping for
bargains
the fastest and retailer to discover retailer for advice retailer because it products that need
most convenient
new things
on how to do
reflects how I to be replaced on a
way
things or get help express myself
routine basis
solving problems and my lifestyle
Note: Arrows indicate significant difference vs. all shoppers (95% confidence level)
Gen Y=170, Gen X=377, Boomers=431, Seniors=183
Source: Kantar Retail ShopperScape®, July 2013
© Copyright 2014 Kantar Retail
27
One Thing Is Clear: Online Shopping Is
Influencing and Will Continue to Impact Trips
Changes in Shopping Behavior Due to Online Shopping
(% who say statement describes them "quite well" or "somewhat")
All Shoppers
All Monthly Club Shoppers
70%
65%
54%
57%
What I am trying to accomplish on shopping Online shopping has replaced some of the
trips to stores has changed because of the shopping trips I used to make to stores
kinds of online shopping I am doing
Note: Arrows indicate significant difference vs. all shoppers (95% confidence level)
All shoppers=4004, Club shoppers=1043
Source: Kantar Retail ShopperScape®, October 2013
© Copyright 2014 Kantar Retail
28
Changes in Club Shoppers Behavior Due to Online
Significant differences by Segment
(% who say statement describes them "quite well" or "somewhat")
90%
80%
70%
70%
67%
60%
50%
80%79%
76%
57%
51%
62%
51%
67%
76%
63%
54%
Monthly Club Shoppers
Gen Y
Gen X
40%
30%
Vs. all club shoppers
37%
Boomers
Seniors
20%
Have Nots
10%
Haves
0%
What I am trying to accomplish Online shopping has replaced
on shopping trips to stores has some of the shopping trips I
changed because of the kinds
used to make to stores
of online shopping I am doing
Note: Arrows indicate significant difference vs. all monthly club shoppers (95% confidence level)
Club shoppers=1043, Gen Y=131, Gen X=349, Boomers=398, Seniors=165, Have Nots=448, Haves=595
Source: Kantar Retail ShopperScape®, October 2013
© Copyright 2014 Kantar Retail
29
Meanwhile, the Club Trip Is In Flux
Costco
Sam's Club
8%
7%
5%
3%
4%
8%
7%
8%
5%
3%
2%
4%
5%
4%
7%
7%
14%
8%
8%
19%
17%
28%
BJ's
17%
18%
7%
4%
4%
6%
6%
4%
3%
9%
Buy Coupon
Items
Buy Sale
Items
Browsing
10%
21%
15%
Special
Occasion
55%
52%
44%
46%
Immediate
Use Trip
53%
46%
Fill-in Trip
Stock-up
Trip
2010
2013 YTD
2010
2013 YTD
2010
2013 YTD
Total club shoppers 2013 YTD=675; 2012=945; 2011=912; 2010=674
Source: Kantar Retail ShopperScape®, May/Aug/Nov 2010, Feb/May/Aug/Nov 2011 & 2012, Feb/May/Aug 2013 © Copyright 2014 Kantar Retail
30
Overall Visits Down for Most Recent Grocery Trip
Trips down in 2013 as shoppers consolidate retailers shopped
Average Trips per Month
Self-reported # of trips per month for groceries/HH essentials/HBC
2010*
2011
4.2
2012
2013
4.1
3.8
3.6
3.0
3.6
3.5
2.9
Costco Trips
2.9
BJ's Trips
2.7
2.7
2.6
Sam's Club Trips
Note that average number of trips per month is based on self-reported shopping frequency for select
months and for most recent grocery trip
*2010 consists of data from May, August and November only
Note: 2013 Samples Sizes: BJs=150; Costco=500; Sam’s Club=274
Source: Kantar Retail ShopperScape®, May/Aug/Nov 2010 and Feb/May/Aug/Nov 2011, 2012, and 2013
© Copyright 2014 Kantar Retail
31
Ticket Is Also Softening…
9%
7%
5%
Total Comps (exc.
gas, FX). 5.0%
Traffic, 4.0%
3%
1%
-1%
Excluding FX,
average
transaction up
just over 1%.
Ticket, -1.0%
-3%
Source: Kantar Retail research, analysis; company reports, presentations (March 2014)
© Copyright 2014 Kantar Retail
32
The Core Threat: Amazon
Percentage of shoppers who are Prime members, by club
Dec-11
Dec-12
Dec-13
27%
26%
24%
19%
14%
19%
22%
20%
18%
18%
16%
14%
13%
13%
10%
All Shoppers
All Monthly Club
Shoppers
Monthly BJ's
Shoppers
Monthly Costco
Shoppers
Source: Kantar Retail ShopperScape®, December 2011, December 2012, and December 2013
Monthly Sam's
Club Shoppers
© Copyright 2014 Kantar Retail
33
Percentage of Monthly Club Shoppers Who Are
Amazon Prime Members, by Segment
Dec-11
Dec-12
Dec-13
38%
31%
24%
26%
24%
27%
22%
21%
20%
19%19%
19%
15%
13%
9%
9%
14%
22%
16%
10%
5%
All Monthly
Club Shoppers
Gen Y
Gen X
Boomers
Seniors
Source: Kantar Retail ShopperScape®, December 2011, December 2012, and December 2013
Have Nots Haves (annual
(annual HH
HH income
income <$60k)
$60k+)
© Copyright 2014 Kantar Retail
34
Prime Changes Club Shopper Behavior Even
More Than Typical Shoppers!
All Shoppers
All Monthy Club Shoppers
Tend to check Amazon first before shopping anywhere
else
49%
53%
30%
Shop some retail stores less often
29%
Buy from a wider assortment of categories at Amazon
27%
Buy from a wider assortment of brands at Amazon
Started/added items to Amazon "Subscribe & Save"
program
32%
10%
13%
9%
11%
Stopped shopping some retail stores altogether
Shopping patterns have not changed since joining
Amazon Prime
35%
13%
16%
Shop some online shopping sites less often
Stopped shopping some online shopping sites altogether
39%
4%
5%
21%
29%
Note: Arrow indicates significant difference between all shoppers and monthly club shoppers (95% confidence level)
Source: Kantar Retail ShopperScape®, December 2013
© Copyright 2014 Kantar Retail
35
So, How Are the Clubs Competing?
Sam’s Club is taking the lead – how are you aligning?
Online
Subscription Service:
In-Club
In-Between
Scan & Go:
MEP:
PROSPECTING
Freeosk:
Value, Personalization:
TRUST
Prioritizing
Investments to
Guide Acquisition
ENGAGEMENT
Creating Emotional
Connections
RENEWAL
Customized
Renewal
Communication,
Reinforcing Value
Source: Kantar Retail research, analysis (March 2014)
© Copyright 2014 Kantar Retail
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So, How Are the Clubs Competing?
Costco makes small strides – where can you influence strategy?
Online
Online Delivery Partners:
In-Club
Food
&
Fresh:
Experience & Exclusivity:
“We want our members to buy
everything at Costco, whether it’s instore or online, and we’ll keep trying
some new things.”
– Richard Galanti, CFO, Costco (Dec. 2013)
Online-Only UK Membership:
Source: Kantar Retail research, analysis (March 2014)
In-Between
Broaching data
mining
Growing receptivity
to insights
Ongoing IT
modernization
project
“Rewriting the
membership
system” (ongoing)
Increasing digital
access to MVM
Emphasis on
services across
channels
© Copyright 2014 Kantar Retail
37
So, How Are the Clubs Competing?
BJ’s lacks a cohesive focus – how can you help?
Online
In-Club
Digital Integration:
Instacart
Delivery
Platform:
In-Between
Current &
Prospective Member
Insights, Drivers:
Online Solutions:
Exclusivity
& Custom:
Social
Media
Engagement:
Source: Kantar Retail research, analysis (March 2014)
Engagement
& Experience:
© Copyright 2014 Kantar Retail
38
New Demands for Value Will Continue to Emerge
This will come with rethinking the physical & virtual club space
Greater receptivity to and
integration of insights (i.e.,
shopper, Big Data, data
analytics, predictive modeling);
enhanced abilities to leverage
member, prospect data
Greater emphasis on
best/unique price relative to
conveniences/
transparencies of online;
more discipline around
volume thresholds; more
customization to counteract
price comparisons
Products
Insights
More solutions, H&W oriented, increasingly
localized, personalized to fit different
member types and life stage/style preferences;
tighter, more disciplined sell-out dates
Services
New
Digitally
Driven
Club Value
Framework
Experiences
Prices
Bigger role of online, mobile;
improved item visibility
across platforms; more
opportunity around autoreplenishment models and
conveniences/speed of
delivery
Platforms
More services in the box and
online; greater positioning of
club services as value and
traffic drivers; more innovative
approaches to services and
greater overall integration
with broader assortment
More exciting pallets, more
integrated packaging and
“billboarding”; greater
attention to the sensory
experience in a club
environment where the
“senses” are often left out
Shoppers’ growing digital behaviors, preferences, and interactions will continue to impact club value
perceptions – in turn, clubs and their suppliers must evolve their strategies to account for this.
Source: Kantar Retail research, analysis (March 2014)
© Copyright 2014 Kantar Retail
39
For Long-Term Success, Clubs Will Need Direction
KR Expectations
Supplier Implications
More competition from Amazon
and online shopping in general
• How are you factoring in Amazon (and specifically Prime) as a club
competitor?
• How in touch is your club team with your Amazon counterparts?
• How are you helping the clubs compete with Amazon as a
destination, point of comparison, and club?
More shifts in members’ club trip
missions and uses
• How do category roles evolve along with the club trip?
• How do the clubs contend with the convenience of online?
More overlap between online and
in-club assortments
• What is your multi-channel plan for each club and how are you
building this into your strategic club plans?
• What role are you playing in driving traffic online, to the box, and
via mobile?
More integration with, and more
innovative approaches to,
services
• What broader solutions and services make sense for your brands
as the clubs look across the box, their platforms, and their services
to drive basket and value?
• How might this alter the use of space in the box?
More pressure to differentiate will
demand stronger reliance and
collaboration on data analytics
• How are you speaking to and evolving with club members based
on key life stages and changing preferences and shopping
behaviors?
• How are you really leveraging data to maximize the club offers and
innovations that you are bringing to the table?
Source: Kantar Retail research, analysis (March 2014)
© Copyright 2014 Kantar Retail
40
A Look Ahead: Kantar Retail’s Club Insights
What’s in the queue for you?
• Sam’s Club: No More Business as Usual (4/16)
– Half-day intensive session examining what Sam’s will look
like in the years ahead, how its strategy and shoppers are
transforming, and what it will take to adapt and succeed.
• Now or Never: Full Steam Ahead for Costco (5/6-7)
– Two-day workshop that will provide a deep dive on Costco
including fundamentals of the club model, a forward-looking
strategic analysis, and discussion of three key themes of
evolution at Costco – Global, Shopper, and Digital.
• BJ's : Finding Its Way or Floundering at Sea?
– http://kriq.com/Retailer/SummarySlideDetails.aspx?Retailer=48&id=616822
• “Boxed”: The Next Generation of Club Retail?
– http://kriq.com/Retailer/ArticleDetails.aspx?Retailer=48&id=620090
• Assessing the Club Trip: What Drives Purchasing?
– http://kriq.com/Retailer/ShopperArticleDetails.aspx?Retailer=48&id=622694
Source: Kantar Retail research, analysis (March 2014)
© Copyright 2014 Kantar Retail
41
Contact:
Sara Altukhaim
Director
Sara.Altukhaim@KantarRetail.com
T:+1 617 912 2859
www.kantarretail.com
© Copyright 2014 Kantar Retail
