SHELF
SMARTS
LEVERAGING ASSORTMENT, PRICE AND PROMOTION
TO DRIVE CATEGORY PERFORMANCE
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
RETAIL SALES TRENDS IN US. ARE FLAT
25,000,000,000
20,000,000,000
Selected Convenience
15,000,000,000
Selected Dollar
Selected Mass
Selected Food
10,000,000,000
Selected Drug
Total
5,000,000,000
0
2Q 2012
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013
#Consumer360
2
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
DRIVING EFFICIENCY IS CRITICAL TO SUCCESS
Sales programs (shelf placement, feature, display and pricing tactics)
are the second biggest spend
COGS
Sales Programs
Dist
Adv
R&D
44.1
19.0
7.6
7.5
1.4
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3
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
WE’RE NOT MANAGING ASSORTMENT WELL
Declining velocities against SKU proliferation
Department TDP and $ Velocity Trends
17%
16%
15%
TDP
18%
$ Velocity
11%
9%
1%
-1%
-4%
-4%
-7%
-12%
MEAT
Scantrack: xAOC 2013 vs. 2010
BEAUTY CARE
FROZEN FOODS
DAIRY
GROCERY
HOUSEHOLD CARE
4
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
APPLIED ANALYTICS DRIVE ASSORTMENT PERFORMANCE
Assortment Opportunity
Retailer Performance
Comp Mkt
Retailer
Predicted
Actual
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5
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
MATCH PRICE TO MARKET CONDITIONS
EXPECTATION
REALITY
6
Promotion Frequency and Trade ROI Trend – 2012-2013
Trade ROI
7%
6%
Promotion Frequency
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
PROMOTING MORE BUT GETTING LESS
5%
1Q 2012
2Q 2012
3Q 2012
4Q 2012
Trade ROI
1Q 2013
2Q 2013
3Q 2013
4Q 2013
Promotion Frequency
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7
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
ONLY 10% OF PROMOTIONS ARE PROFITABLE
Products ranked by Trade ROI
(One Category – in Grocery)
$1 is Breakeven
$2
Breakeven $1
$0
-$1
Negative ROI (<$0)
Margin return on trade ($0 < ROI <$1)
Positive return on trade (>$1 ROI)
Best in Class (top 5% trade ROI)
8
Trade ROI by Manufacturer
Sales per Dollar Invested - $1 is Breakeven
$1
Trade ROI
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
SOME MANUFACTURERS OUTPERFORM PEERS
$0
Manuf. A
Manuf. B
Manuf. C
Manuf. D
Manuf. E
Manuf. F
Negative ROI (<$0)
Positive return on trade (>$1 ROI)
Margin return on trade ($0 < ROI <$1)
Best in Class (top 5% trade ROI)
Manuf. G
9
Trade ROI by Segment
Sales per Dollar Invested - $1 is Breakeven
$1
Trade ROI
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
CATEGORIES PERFORM DIFFERENTLY BY SEGMENT
$0
Seg A
Seg B
Seg C
Seg D
Seg E
Seg F
Seg G
Seg H
Seg I
Seg J
Negative ROI (<$0)
Positive return on trade (>$1 ROI)
Margin return on trade ($0 < ROI <$1)
Best in Class (top 5% trade ROI)
Seg K
Seg L
10
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
GET YOUR BALANCE SHEET IN ORDER
Get the right products
on the shelf…
Product
Assortment
At the right price…
Pricing
To enable
winning promotions
Promotion
Management
#Consumer360
11
CASE STUDY: INTEGRATING ASSORTMENT,
PRICE AND PROMOTION
#Consumer360
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
LET’S LOOK AT IT IN ACTION
Classic hi-lo retailer
Over 400 UPCs
$150 million category, flat sales
for a couple years
Only a few major brands
2 brands = 32% of Sales
#Consumer360
13
10
Rationalize
Rationalize
Develop
Develop
16
sub-brands 1 - 7
Rationalize
-2
-10
Develop
10
15
Sub-cat 3
BREAKDOWN
Sales Rate ($/store/week)
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
Retailer
Region
0
4
New Sub-brand
10
0
Squeeze
0
Nurture
Nurture
Squeeze
Squeeze
0
Nurture
Incremental Value ($/Store/Week)
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14
CURRENT
PROPOSED
•
• Introduce higher-performing sub-brand
• Rationalize underperforming sub-brand
• Minor other 1:1 changes
Changes ( Abs. $MM)
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
FIXING ASSORTMENT DRIVES TOPLINE GROWTH
Wide assortment in overdeveloped sub-brands
$1.21
$1.07
$0.55
Retailer $ Sales
Retailer Profit
Manufacturer Gross
Revenue
$0.22
$0.06
Trade Spend
Manufacturer Profit
15
$3.10
$3.19
$3.20
$3.29
$3.30
$3.39
$3.40
$3.49
$3.50
$3.59
$3.60
$3.69
$3.70
$3.79
$3.80
$3.89
$3.90
$3.99
$4.00
$4.09
$4.10
$4.19
$4.20
$4.29
$4.30
$4.39
$4.40
$4.49
$4.50
$4.59
$4.60
$4.69
$4.70
$4.79
$4.80
$4.89
$4.90
$4.99
$5.00
$5.09
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
THRESHOLDS PUT SIGNIFICANT VOLUME AT RISK
Sales Rate Index by Regular Price Point
12%
160
10%
140
120
8%
100
6%
80
4%
60
40
2%
20
0%
0
ACV
ACV "at-risk"
Sales Index
16
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
CURRENT HI-LOW STRATEGY WITH HOLIDAY FOCUS
Key holiday windows
$3.85
Regular Price
Heavy focus
on Holiday Discounts
Holiday timing
Feature
TPR
EDLP spend
Base
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17
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
OPTIMIZED “HYBRID” STRATEGY USES EDLP + EVENTS
Key holiday windows
Use EDLP spend to bring
regular price to
$3.49
(below Threshold)
Focus TPR
& Feature below
$3.00
(on & off Holiday)
Holiday timing
Feature
TPR
EDLP spend
Base
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18
CURRENT
PROPOSED
•
•
•
•
Changes ( Abs. $MM)
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
HYBRID TRADE STRATEGY DRIVES WIN-WIN
Premium regular price
Many deep discount ads
Fewer deep discount ads
Hybrid EDLP spend during peak season to close
gap to competition
$4.01
$1.89
$1.79
$1.02
Retailer $ Sales
Retailer Profit
$0.99
Manufacturer Gross
Revenue
Trade Spend
Manufacturer Profit
19
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
LET’S THINK ABOUT THIS AS A SYSTEM
Get the right products
on the shelf…
Product
Assortment
At the right price…
Pricing
To enable
winning promotions
Promotion
Management
#Consumer360
20
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
FIXING THE BASELINE SUPERCHARGES PROMOTIONS
Display provides 200% lift. Same Display effectiveness
drives 100 more incremental units due to increase in baseline
Total 450
Incremental 300
+100
Total 300
Incremental 200
Cannibalization -30
Cannibalization -40
Baseline 100
Baseline 150
+50
Baseline
Incremental
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21
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
WIN ON ALL METRICS: 1 + 1 > 2
$6,000,000
+9.4%
$5,000,000
$4,000,000
+6.7%
$3,000,000
+28.2%
+3.9
$2,000,000
+1.0
$1,000,000
$0
RetailerRetailer
$ Sales
$ Sales
RetailerRetailer
Profit
Manufacturer
Gross Revenue
Manufacturer
Profit
PNP Alone
Trade Spend
Trade
Gross Revenue
Assort. Alone
Spend
Combined
Manufacturer
Profit
Manufacturer
Profit
22
INTEGRATED PLANNING
USES INSIGHTS TO DRIVE DEMAND
#Consumer360
YOU NEED TO KNOW WHERE YOU STAND
DEVELOP
RATIONALIZE
Key category driver
Avg Sales Rate
Increase items
Make sure you have the best items in distribution
Detrimental to category performance
De-list worst performers
slow
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
Saturated; restricting category growth
Helps maximize category sales
Review slow mover for de-listment
NURTURE
SQUEEZE
negative
Distribution (# Items)
fast
High incrementality would lead to different actions than low
Consumer Response to Assortment (Incrementality)
positive
24
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
SUCCESSFUL TRADE STRATEGIES BY CATEGORY
Best in Class (top 5% trade ROI)
Remaining category
#Consumer360
25
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
GET YOUR BALANCE SHEET IN ORDER
Get the right products
on the shelf…
Product
Assortment
+
At the right price…
Pricing
=
To enable
winning promotions
Promotion
Management
#Consumer360
26