U.S. Retailing & Consumer Trends
August 27, 2009
Todd Hale
SVP Consumer & Shopper Insights
Version 8
Confidential & Proprietary • Copyright © 2009 The Nielsen Company
Agenda
• Economic Update
• Retail Trends
• Retail Channel Demographics
• Buying Trends
• Consumer Trends
U.S. Retailing & Consumer Trends
March 16, 2016
Page 2
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•Economic
Update
U.S. Retailing & Consumer Trends
March 16, 2016
Page 3
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Copyright © 2009 The Nielsen Company
4th Quarter Free Fall Over, But July Weaker
Than Expected
+1%
9%
8.9%
8.2%
+.7%
8.3%
7%
5.5%
3.8%
5%
2.7%
Mar Apr
Sep Oct Nov Dec
Jan Feb
4.6%
Jul
MayJun
-0.2%
3.0%
-0.6%
3%
-0.9%
-1.2%
1%
-1%
0.5%
0.3%
7.3%
1999 2001 2002 2003 2004 2005 2006 2007 2008
-2.0%
-3%
-2.7%
-5%
-3.1%
% change in retail sales (ex-auto)
vs. prior
month*
* Seasonally Adjusted
Dept of Commerce: % Chg vs. previous year
U.S. Retailing & Consumer Trends
March 16, 2016
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Same Store Sales Reflect Consumer Actions
Home Depot
Lowe’s
JCPenney
Macys
Discretionary Spending
Nordstrom
Kohls
Target
Whole Foods
Rite Aid
Walgreens
CVS
Kmart
Walmart
Value & Convenience
Family Dollar
Same Store
Sales Growth
Dollar Tree
Dollar General
SuperValu
Safeway
Kroger
Costco
Stock Up & Save
BJ's
Sams
-15
-10
-5
0
5
10
15
Source: Company press releases; July‘09 results (excl fuel) for al but Sam’s Club, Kroger, Safeway, SuperValu, Dollar General, Family Dollar, Walmart,
Dollar Tree, CVS, Kmart, Whole Foods, Home Depot, Lowe’s – latest quarterly report
U.S. Retailing & Consumer Trends
March 16, 2016
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Buying
Trends
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March 16, 2016
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Softness in Recent Quarter Driven in Part by Price
Cuts in Dairy & Other Departments
% Dollar Growth (FDM w/WM)
Unit prices for fresh eggs
& milk down 20% & 18%
in latest quarter
12
10
Latest
52 wk
13 wk
8
6
4
2
ic
ho
l
M
er
ch
G
en
Da
iry
HB
A
od
No
nFo
De
li
e
Pr
od
uc
h
Fr
oz
en
Fr
es
Be
ve
ro
ce
r
G
Dr
y
ge
ck
a
ra
ge
s
y
t
h
d
Al
co
-8
Pa
-6
Fr
es
-4
M
ea
M
ea
ta
l
To
-2
t
0
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 07/11/09 (versus prior year)
U.S. Retailing & Consumer Trends
March 16, 2016
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Enhanced Unit Sales in Recent Quarter in Total & in
Six of Eleven Departments
% Unit Growth (FDM w/WM)
Latest
10
52 wk
13 wk
5
HBA
0
-5
Total
Fresh
Meat
Alco
Bev
Deli
Pkgd
Meat
Dairy Fresh
Frozen
Produce
Non General
Food Merch
Dry
Grocery
-10
-15
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 07/11/09 (versus prior year)
U.S. Retailing & Consumer Trends
March 16, 2016
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Consumers Turn to Store Brands In Down Economy—
Improved Brand Performance in Recent Periods
Store Brands
Avg Unit Sales Growth:
8.6
Store
Brands
5.8%
Driver of growth: Consumables*
6.4
5.3
5.6
Departments:
4.7
3.9
* Latest Quarter
Fresh Produce,
Fresh Meat,
Packaged
Meat, Dairy, Dry
Grocery, Frozen, Deli
% Unit Sales Growth for last 6 (4-week) periods
Branded
2.2
Branded
Avg Unit Sales Growth:
-1
-2.2%
Driver of growth: Discretionary plus*
-1.1
-1.8
Departments:
-4.3
-7.2
General Merchandise,
Non-Foods, Health &
Beauty, Dry Grocery
* Latest Quarter
Source: Nielsen Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 07/11/09 (versus prior year)
U.S. Retailing & Consumer Trends
March 16, 2016
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SB Growth Driven First by Higher Prices, But
Unit Growth Indicates Real Shifting
+14%
Private Label $ Change Vs. Year Ago
Private Label Unit Change Vs. Year Ago
+12%
+10%
+8%
+6%
2007
+4%
Higher Prices
Drive PL
Growth
+2%
+0%
2008+
-2%
Real Shifting from
Brands to PL
-4%
/0
9
07
/1
1
/0
9
4
W
/E
03
/2
1
/0
8
4
W
/E
11
/2
9
/0
8
4
W
/E
08
/0
9
/0
8
4
W
/E
04
/1
9
/0
7
4
W
/E
12
/2
9
/0
7
4
W
/E
09
/0
8
/0
7
4
W
/E
05
/1
9
/0
7
4
W
/E
01
/2
7
/0
6
4
W
/E
10
/0
7
/0
6
4
W
/E
06
/1
7
/0
6
W
/E
4
4
W
/E
02
/2
5
/0
5
/0
5
11
W
/E
4
4
W
/E
07
/1
6
/0
5
-6%
Source: Nielsen Scantrack, a service of The Nielsen Company; (FDM ex-Walmart)
U.S. Retailing & Consumer Trends
March 16, 2016
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•Consumer
Trends
U.S. Retailing & Consumer Trends
March 16, 2016
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How Consumers Have Reacted During
The “Great Recession”?
Still very much in the game – only 5% in panic mode
What didn’t change? Big, enduring trends never went on
vacation:
Health & Wellness
Convenience
Demographics (aging, ethnic, haves vs. have nots)
What did change? Near-term trade-offs numerous & different:
Reordering shopping lists: Back to Basics
Changing where & how they shop
Opting out of certain categories entirely
Redefining discretionary versus essential spending
Trading across categories
Trading down on brands
U.S. Retailing & Consumer Trends
March 16, 2016
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How Consumers Have Reacted During
The “Great Recession”?
Some huge macro-trend busters:
Away-from-home consumption took a big hit
Pampering shift from spas & salons to at-home solutions
Savings rates go to black
Store Brands a viable choice for more consumers
Questions:
Will we see long lasting changes in consumer buying & shopping?
• Return to normalcy or continued restraint
Did you, or are you, going on the offensive or defensive to exploit
what has changed or what hasn’t changed?
U.S. Retailing & Consumer Trends
March 16, 2016
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Demographic
Trends
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March 16, 2016
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We Are Aging Because We
Aren’t Having Kids
35
Live births per 1,000 population
30
25
20
15
10
1900 1930 1955 1971 1976 1981 1986 1991 1996 2001 2006
Birth Rate
Source: U.S. Census Bureau
U.S. Retailing & Consumer Trends
March 16, 2016
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U.S. Population Growth At All Time Low
• Average 1% growth for
decades to come
• Much higher than the rest of
the developed world, but much
slower than we are used to
• Strongly dependent on new
immigrants & their children –
82% of growth (100% of
growth among children)
Source: The Nielsen Company & Pew Research Center
U.S. Retailing & Consumer Trends
March 16, 2016
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2037 Will Be Our Oldest Year
• Nearly 30% of HHs will be
headed by a person over
the age of 65
• Over 72% of 65+ HOHs will
be white (non Hispanic)
• 48% of 65+ HOHs will be in
single person HHs
• 45% male / 55% female
Source: The Nielsen Company
U.S. Retailing & Consumer Trends
March 16, 2016
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Households With Children Will
Continue to Decline
45
40
35
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
25
1955
30
1950
% HHs with Children
50
Source: U.S. Census Bureau & The Nielsen Company
U.S. Retailing & Consumer Trends
March 16, 2016
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Share of Population Growth by Race / Ethnicity
100
90
80
70
60
50
40
30
20
10
0
2007 2011 2015 2019 2023 2027 2031 2035 2039 2043 2047
White
Black
Hispanic
Asian
Other
Source: The Nielsen Company
U.S. Retailing & Consumer Trends
March 16, 2016
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Projections for Families with Children
• HHs with children become more
ethnic more quickly than any
segment
• Lowest affluence group will be
the only one to gain share –
from a quarter to third of
families by 2050
Source: The Nielsen Company
U.S. Retailing & Consumer Trends
March 16, 2016
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Thinking About Economics
• HHs closest to the
poverty line will grow the
most, at the expense of all
others, but especially the
middle
• Price & value will gain in
importance in consumer’s
purchasing decisions
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March 16, 2016
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Thinking About Families
• HHs with children will continue to
decrease in share & average HH
size will decrease
• Families with children become
more ethnic more quickly than
the total population
• Multi-cultural marketing will
not be an option
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March 16, 2016
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Thinking About Portfolios
• Brands & categories with strong
skews to HHs with children will
experience a “demographic drag”
from slow growth
• Brands with older consumer
franchises could enjoy a growth
boom – but beware of cohort effects
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March 16, 2016
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A Challenging Future Between…
Very diverse consumer segments…
- Multicultural
- Aging
- Economically distressed
…and a shrinking pie
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March 16, 2016
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Projecting Behavior into the Future - Few
Categories Will Grow Faster than HHs
• Highest percentage growth categories
– Ethnic HABA
– Medications / remedies
– Health aids
– Vitamins
– Flour / shortening / sugar / yeast / eggs
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March 16, 2016
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Projecting Behavior into the Future - Few
Categories Will Grow Faster than HHs
• Highest percentage growth categories
– Ethnic HABA
– Medications / remedies
– Health aids
– Vitamins
– Flour / shortening / sugar / yeast / eggs
• Lowest percentage growth categories
– Toys & sporting goods
– Breakfast foods
– Baby care – diapers, food, etc.
– Pet products
U.S. Retailing & Consumer Trends
March 16, 2016
But the mix within
categories may
shift across value
segments –
Super Premium
Premium
Mainstream
Value
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Retailers Are Focused On Seniors
Kroger: Seniors receive a
10% discount OFF of your
total purchases on the first
Wednesday of every
month. All Seniors, 60
years and older are eligible!
(KY & TN Stores Only!)*
Source: Company websites
U.S. Retailing & Consumer Trends
March 16, 2016
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Kmart Providing Focus & Savings for 50 +
Source: kmart.com
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March 16, 2016
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A Simple Solution from Target – Large Print on
Prescription Medications
Source: target.com
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March 16, 2016
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HBC Senior Focus – What about Food &
Beverage & Non-Food?
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Meals For Two
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Independent Hispanic Grocers
Source: company websites and Houston Chronicle
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March 16, 2016
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Hispanic-Focused Store Formats
Source: company websites and azcentral.com
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March 16, 2016
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Food Lion Converting Existing Locations to Hispanic
Formats – 10% of North Carolina Stores to be Converted
Source: FoodLion.com
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March 16, 2016
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Asian Supermarkets
Source: company websites
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March 16, 2016
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Walgreens in Chicago’s Chinatown - Catering to
the Demographics of the Neighborhood
Source: Photograph taken by Nielsen employee
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March 16, 2016
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Ethnic Diversity Impacting General Population
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March 16, 2016
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Language Preference Options
Source: company website
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March 16, 2016
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Link on Nestlé USA website – click on Mas Recetas
in En Español box
Source: company website
U.S. Retailing & Consumer Trends
March 16, 2016
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Welcome to the Cocinando con Nestlé Website
Source: company website
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March 16, 2016
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Unilever Launches Hispanic Website
Source: Unilever’s Vivemejor website
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March 16, 2016
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Excellent Use of Product Shots in Ethnic Marketing
Source: Company website
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March 16, 2016
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Convenient
Consumer
Solutions
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Retailers Winning w/Technology Today
Source: Company websites
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March 16, 2016
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Competition from Companies Who Know How
To Sell On-line
100 Meals for Under $10
Source: Company websites
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March 16, 2016
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Fresh Food & Prepared Meal Competition
Source: Company website
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March 16, 2016
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Retailers Taking Advantage of iPhone Apps
Source: Apple iTunes Store
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March 16, 2016
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• Announced in September, 2008
• In 2,700 U.S. stores
• On 27,000 screens
• Billed as the first “shopperintelligent network at retail”
Source: mediapost.com and c3brandworks.com
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March 16, 2016
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Hy-Vee Site on “facebook” & Launches New
Shopping Capabilities on Website
Source: Company website
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March 16, 2016
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New Look to Target Weekly “On-Line” Ad
Source: target.shoplocal.com
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March 16, 2016
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Kraft Very Active On-Line Providing Consumers
Great Recipe Ideas & How-To Videos
Source: Kraft food&family newsletter
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March 16, 2016
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Kraft Launches kraftstore.com to Help
Consumers With Kitchen & Cooking Solutions
Source: Company website
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March 16, 2016
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Cooking Solutions from General Mills Too
Source: bettycrockerstore.com
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March 16, 2016
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Convenient Solutions Skyrocketing
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March 16, 2016
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Convenient Solutions Skyrocketing
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Convenience Foods Steam Up!
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Convenient Solutions Skyrocketing
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Pre-measured
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March 16, 2016
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“On-The-Go” & “Travel Packs”
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“On-The-Go” & “Travel Packs”
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March 16, 2016
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Health
& Wellness
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March 16, 2016
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Economy Taking Toll on Organics
+35%
+30%
UPC-Coded Organics
+25%
+20%
+15%
+10%
+5%
Monthly $ sales growth of organics
below 4% in last seven periods
02
/2
W
5/
/E
0
0
4
4/ 6
W
22
/E
/
06 06
4
/1
W
7/
/E
0
0
4
8/ 6
W
12
/E
/
10 06
4
/0
W
7/
/E
12 06
4
/0
W
2/
/E
0
0
4
1/ 6
W
27
/E
/
03 07
4
/2
W
4/
/E
0
0
4
5/ 7
W
19
/E
/
07 07
4
/1
W
4/
/E
0
0
4
9/ 7
W
08
/E
/
11 07
4
/0
W
3/
/E
0
1
4
2/ 7
W
29
/E
/
02 07
4
/2
W
3/
/E
0
0
4
4/ 8
W
19
/E
/
06 08
4
/1
W
4/
/E
0
0
4
8/ 8
W
09
/E
/
10 08
4
/0
W
4/
/E
11 08
4
/2
W
9/
/E
0
0
4
1/ 8
W
24
/E
/
03 09
4
/2
W
1/
/E
0
0
4
5/ 9
W
16
/E
/
07 09
/1
1/
09
+0%
4
4
W
/E
-5%
Source: Scantrack & LabelTrends, services of The Nielsen Company; (FDM ex-Walmart) % Change in 4-Week Dollar Sales vs. YAGO end 07/11/19
U.S. Retailing & Consumer Trends
March 16, 2016
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Struggling Label Claims
Multi-Grain
Calcium
Vitamin & Mineral
Sweetener
Preservative
Caffeine Free
Sodium
Fat Claim
Cholesterol
Soy
Flax Hemp Seed
Plant Sterol
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
% Change in Units
Source: Scantrack & LabelTrends, services of The Nielsen Company; (FDM ex- Walmart) 13 weeks ending 07/11/09 (versus prior year)
U.S. Retailing & Consumer Trends
March 16, 2016
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Winning Label Claims
Omega
Fructose Corn Syrup Free
Fiber
Gluten Free
Protein
Antioxidants
Probiotic
GMO Free
Reduced Calorie
Natural
Low Glycemic
Hormone Antibiotic Free
No MSG
Whole Grain
Carb Conscious
Lactose Free
No Calories
Organic
0
10
20
30
40
50
60
% Change in Units
Source: Scantrack & LabelTrends, services of The Nielsen Company; (FDM ex- Walmart) 13 weeks ending 07/11/09 (versus prior year)
U.S. Retailing & Consumer Trends
March 16, 2016
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In-Store Clinics
Source: Bloomberg News (minuteclinic photo) and company websites
U.S. Retailing & Consumer Trends
March 16, 2016
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Copyright © 2009 The Nielsen Company
400 Walmart In-Store Health Clinics by
2010? 78 clinics in 2008, but only 31 in June of 2009
• “The Clinic at Walmart” brand
• First clinics opened April-08 in Atlanta
• Co-branded with local hospitals
• Average visit: $50 - $65
Source: Company website & BusinessWeek
U.S. Retailing & Consumer Trends
March 16, 2016
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Walgreens & AARP – Natural Fit
Source: Company website
U.S. Retailing & Consumer Trends
March 16, 2016
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Grocers Stressing Health & Wellness Solutions in
Store Layout, Assortment, Labels & Advertising
Source: Company websites
U.S. Retailing & Consumer Trends
March 16, 2016
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Safeway FoodFlex Tracks Nutritional Foods
Purchased With Shopper Card
Source: Company website
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March 16, 2016
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Manufacturers Web Sites Focused On
Healthy Eating & Living
Source: Company websites
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March 16, 2016
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Welcome to KRAFT Live Happy and Healthy
Source: Personalized email from Kraft Kitchens
U.S. Retailing & Consumer Trends
March 16, 2016
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“Better for You” Items
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March 16, 2016
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“Better for You” Items
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March 16, 2016
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Convenience “and” Healthier
“10 minutes prep time & contain
45 percent less sodium than
previous Tyson meal kits”
U.S. Retailing & Consumer Trends
March 16, 2016
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Sustainability
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March 16, 2016
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Retailers:
Sustainability in the Marketplace
“Acres for America”
program purchases one
acre of nature preserve
for every acre Walmart
develops until 2015
The “Love Earth” Jewelry
line at Walmart can be
traced from mine to
market via the interne.
Over 100 Million Compact
Fluorescent bulbs have
been sold, each CFL
uses 75% less energy
than regular bulbs
Wal-Mart has over 500,000
employees with PSPs or
Personal Sustainability
Projects
“Healthy Food
Summits” in store
program that teaches
consumers to eat
healthier for less
money
BSCI or Business
Social Compliance
Initiative was started
to monitor & improve
working conditions
in the global value
chain
Retrofitting Freezers &
coolers with Glycol
refrigerant &
replaced old freezer
doors with newer
energy efficient
doors
Wind Energy Credits to
offset 100% of store
energy use
5% donation days to
local environmental
causes
Biodegradable food
packaging replaced
with natural fiber
material
Home grown products:
over 10,000 items
sourced from their
region of the country
Bike Commute challenge:
Over 250 employees
biked to work for a
month saving 3,774
trips & 28,549 miles
5¢ per reusable bag
refund & banning
plastic bag use
Stores have a series of
planter like ditches that
divert water from sewers
& covered with soil &
plants that divert water
Use of less toxic
cleaning products in
all stores helps
reduce air & water
pollution
Biodiesel delivery vans:
Online shopping delivery
program that prevents
over 240 trips to the
store each day
Source: Company Websites
U.S. Retailing & Consumer Trends
March 16, 2016
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Sustainability in Corporate Messaging
Source: Company website
U.S. Retailing & Consumer Trends
March 16, 2016
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Sustainability in Corporate Messaging
Source: company website
Source: Company website
U.S. Retailing & Consumer Trends
March 16, 2016
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Sustainability in Brands
U.S. Retailing & Consumer Trends
March 16, 2016
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•Consumer
Trends
Summary
U.S. Retailing & Consumer Trends
March 16, 2016
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Opportunity & Risks in Enduring &
New Mega Trends
Enduring Trends
Health & Wellness
Convenience
Demographics (aging, ethnic, haves vs. have nots)
New Mega Trends
At-home meals
Pampering shift to home solutions
Store brands a viable option for more consumers
Positive savings rates
Did you, or are you, going on the offensive or defensive
to exploit what has changed or what hasn’t changed?
U.S. Retailing & Consumer Trends
March 16, 2016
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Thank You
todd.hale@nielsen.com
Confidential & Proprietary • Copyright © 2009 The Nielsen Company