What to Expect from Shoppers in 2014 Presented by: Rachel McGuire, Senior Analyst Kate Senzamici, Senior Analyst Mary Brett Whitfield, Senior Vice President U.S. Shopper FDM Webinar February 7, 2014 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: What to Expect from Shoppers in 2014 • Shopping Approaches and Spending Priorities • Perceptions of Price Leadership • Loyalty Programs –Update on Safeway’s “just for U” Program © Copyright 2014 Kantar Retail 3 Shopping Approaches and Spending Priorities © Copyright 2014 Kantar Retail 4 Despite Macro-Economic Uncertainty, Spending Intentions Holding Steady Retail Spending Intentions in Coming Month Compared with the Same Period Last Year (three-month moving average) Spend about the Same Spend Much/ Somewhat Less Spend Much/ Somewhat More Source: Kantar Retail ShopperScape®. June 2008–December 2013 © Copyright 2014 Kantar Retail 5 Deal Seeking Continue at Top of the List … but perhaps less top of mind as behaviors ingrained in routines Planned Changes in Shopping Behavior for Year Ahead (among all primary household shoppers) Behavior Changes 2013 2014 Type of Behavior Taking advantage of good sales/deals Buying only things I truly need Using more coupons Buying fewer things Doing more price comparison shopping before purchasing Shopping less often Using/keeping items longer before buying replacements Buying only items needed in the near term Shopping more at discount and value retailers Postponing more purchases Buying less expensive versions of products Buying more store brands instead of national or high-end brands Buying fewer luxury items Shopping online for more things Shopping online more often Trading down to less-expensive brands Using smart phone to compare prices while in stores Switching some purchasing to "auto-replenishment" programs 49% 45% 41% 34% 29% 29% 25% 25% 24% 19% 19% 18% 18% 14% 13% 12% 7% 1% 47% 45% 41% 38% 29% 31% 25% 26% 24% 21% 20% 18% 19% 15% 15% 12% 7% 1% Deal-Seeking Limiting Deal-Seeking Limiting Deal-Seeking Limiting Limiting Limiting Trading-Down Limiting Limiting Trading-Down Trading-Down Moving Online Moving Online Trading-Down Deal-Seeking Moving Online Source: Kantar Retail ShopperScape®, October 2012 and October 2013 © Copyright 2014 Kantar Retail 6 Have-Not Shoppers More Likely to Plan More Changes Planned Changes in Shopping Behavior for Year Ahead (2014) (among all primary household shoppers) Behavior Changes Taking advantage of good sales/deals Buying only things I truly need Using more coupons Buying fewer things Doing more price comparison shopping before purchasing Shopping less often Using/keeping items longer before buying replacements Buying only items needed in the near term Shopping more at discount and value retailers Postponing more purchases Buying less expensive versions of products Buying more store brands instead of national or high-end brands Buying fewer luxury items Shopping online for more things Shopping online more often Trading down to less-expensive brands Using smart phone to compare prices while in stores Switching some purchasing to "auto-replenishment" programs Have Nots Haves 46% 48% 42% 39% 30% 34% 27% 29% 27% 23% 25% 21% 19% 14% 14% 14% 6% 1% 48% 39% 40% 35% 26% 27% 24% 23% 19% 19% 13% 13% 18% 16% 17% 8% 10% 1% Type of Behavior Deal-Seeking Limiting Deal-Seeking Limiting Deal-Seeking Limiting Limiting Limiting Trading-Down Limiting Limiting Trading-Down Trading-Down Moving Online Moving Online Trading-Down Deal-Seeking Moving Online Note: Have-Not shoppers have annual household income less than $60K’; Have shoppers have annual household income of $60K+ Source: Kantar Retail ShopperScape®, October 2013 © Copyright 2014 Kantar Retail 7 Shoppers Signaling More “Limiting” in 2014 Plus online shopping more likely to be in the mix Planned Changes in Shopping Behavior: 2014 vs. 2013 2013 2014 – Buying fewer things 34% 38% – Shopping less often 29% 31% – Postponing more purchases 19% 21% (among all primary household shoppers) Growing participation vs. last year: • Limiting Behaviors Note: Yellow shading indicates a significant difference between 2013 and 2014 (90% confidence level) Source: Kantar Retail ShopperScape®, October 2012 and October 2013 © Copyright 2014 Kantar Retail 8 Store Set Contracts in 2013 Average Number of Retailers Shopped in Past Four Weeks* (among all primary household shoppers) 12.4 12.4 11.1 11.1 11.2 11.2 10.7 *Inclusive of visits to stores and websites; averages are for Q1–Q3 of each year. Source: Kantar Retail ShopperScape®, January 2007–October 2013 © Copyright 2014 Kantar Retail 9 Evidence that Shoppers Drawing Boundaries Mounts • Data points indicate that “Limiting” is on the agenda – Fewer retailers shopped for back-to-school – Fewer retailers shopped for holiday gift giving – Lower rate of category purchase incidence across myriad discretionary and nondiscretionary categories in Q4 Source: Kantar Retail ShopperScape®, December 2010–2013 © Copyright 2014 Kantar Retail 10 Categories that Maintained Q4 Purchaser Base Categories with Flat Category Purchaser Incidence Rate Q4 2013 vs. Q4 2012 (among 80+ categories tracked ) • TVs • Video game system • Personal computers • Tablet computers • Printers • Small and major appliances • Craft/hobby/arts supplies • Sporting goods • Key home improvement categories • Color cosmetics • Pet food and supplies • Beer and wine • Vitamins Source: Kantar Retail ShopperScape®, October–December 2013 No categories had significantly higher purchasing rates … © Copyright 2014 Kantar Retail 11 Staying Healthy and Organized Are Top Spending Priorities Spending Priorities (% of shoppers selecting products as one of top five near-term spending priorities) % selecting as top priority 24% 10% 9% 8% 7% 5% 10% 5% 5% 3% 3% 2% 2% 3% 2% 2% 1% Source: Kantar Retail ShopperScape®, October 2013 © Copyright 2014 Kantar Retail 12 Varying Priorities by Generation Help Further Refine Opportunities Top 5 Spending Priorities by Generation (as ranked by percentage of shoppers selecting products as one of top five near-term spending priorities) Gen Y Gen X Boomers Seniors Better organize/ manage life Stay healthy Stay healthy Stay healthy Stay healthy Better organize/manage life Better organize/manage life Save time on HH chores Personalized for needs/tastes Save time on HH chores Save time on HH chores Better organize/manage life Hobbies/activities Stay fit Hobbies/activities Stay in home longer Little indulgences/small luxuries Personalized for needs/tastes Personalized for needs/tastes Stay fit Source: Kantar Retail ShopperScape®, October 2013 © Copyright 2014 Kantar Retail 13 Minimal Differences by Income Opportunities across the “good-better-best” spectrum • Haves and Have Nots have same top spending priorities … Key Differences in Spending Priorities: Haves vs. Have Nots Staying healthy Staying organized • … but a few differences farther down the list Source: Kantar Retail ShopperScape®, October 2013 © Copyright 2014 Kantar Retail 14 Amazon Becomes the Top Holiday Destination Leapfrogs Target in 2011, Walmart in 2013 Note; Arrows indicate significant decline vs, holiday 2012 (95% confidence level) Source: Kantar Retail ShopperScape®, December 2011, December 2012 and December 2013 © Copyright 2014 Kantar Retail 15 Holiday Shopping Shifts Online Proving ground for building online shopping routines Holidays set stage for year-round online shopping Source: Kantar Retail ShopperScape®, December 2013 Budget shifted more toward online/Cyber Week than Black Friday © Copyright 2014 Kantar Retail 16 Online Disrupts Shopping Routines How Approach to Shopping Has Changed in Past Year Percent of Shoppers Indicating Statement Describes “Quite Well” or “Somewhat” Online Disrupts Shopping Routines Source: Kantar Retail ShopperScape®, October 2013 © Copyright 2014 Kantar Retail 17 Perceptions of Price Leadership © Copyright 2014 Kantar Retail 18 Price Remains Paramount in the Value Equation Which retailers are best positioned to win with price-sensitive shoppers looking to limit spending in 2014? Source: Kantar Retail ShopperScape®, January 2013 © Copyright 2014 Kantar Retail 19 Walmart’s EDLP Message Reflected in Shoppers’ Price Perceptions But how do “core” shoppers view these retailers? Source: Kantar Retail ShopperScape®, November 2013 © Copyright 2014 Kantar Retail 20 Walmart Perceived Leader for Shelf-Stable Grocery HEB slips vs. last year, while ALDI gains Source: Kantar Retail ShopperScape®, November 2011, November 2012, and November 2013 © Copyright 2014 Kantar Retail 21 HEB Dominates in Fresh Grocery Supermarkets in general the perceived price leaders Source: Kantar Retail ShopperScape®, November 2011, November 2012, and November 2013 © Copyright 2014 Kantar Retail 22 Walmart Leads in Household Essentials Many supermarkets see slight gains in price perception Source: Kantar Retail ShopperScape®, November 2011, November 2012, and November 2013 © Copyright 2014 Kantar Retail 23 Walmart’s Lead in HBC Price Perception Slips Walgreens and Publix make gains Source: Kantar Retail ShopperScape®, November 2011, November 2012, and November 2013 © Copyright 2014 Kantar Retail 24 Summary of Price Leadership Winners and Losers Retailers Trending Up/Down In Price Leadership Perception Among Monthly Shoppers Trending Up Trending Down Non-perishable grocery • Publix • Ahold banners • Safeway banners • Walmart • Sam’s Club Fresh grocery • • • • HEB Kroger banners Publix Safeway banners • ALDI • Sam’s Club HH cleaning and paper products • Kroger banners • Safeway banners • Publix • Sam’s Club HBC • Walgreens • Publix • Walmart • Family Dollar Source: Kantar Retail ShopperScape®, November 2011, 2012, and 2013; Kantar Retail analysis © Copyright 2014 Kantar Retail 25 Two Retailers Improved Across All Categories from 2012 to 2013 Price Leadership Perception Among Monthly Shoppers of Retailers Source: Kantar Retail analysis and ShopperScape ®, November 2012 and November 2013 © Copyright 2014 Kantar Retail 26 Price Leadership Perceptions Differ by Key Demographic Groups Price Leadership Perception, by Generation and Income (demographic groups listed significantly more likely vs. all shoppers to name retailer/channel as price leader) Walmart/Walmart Supercenter Target/SuperTarget Warehouse clubs Drug stores Dollar stores Supermarkets 1 NonPerishable Grocery Fresh Grocery Have Nots1 Gen X Seniors Have Nots1 Gen Y Seniors Have Nots1 Haves1 HH Cleaning and Paper HBC Gen Y Seniors Boomers Gen Y Seniors Have Nots1 Have Nots1 Haves1 • Target more likely to be perceived price leader for non-perishable grocery among Gen X, but all other categories among Gen Y • • Seniors more likely to view clubs as price leader across all categories Walmart’s price leadership perception strongest among lower-income shoppers and Boomers—historically, Walmart’s core shopper base “Have Nots” are those with an annual household income of <$60k; “Haves” are those with an annual household income of $60k+ Source: Kantar Retail ShopperScape®, November 2013 © Copyright 2014 Kantar Retail 27 How Well Do Shoppers’ Perceptions Match Reality? $42.49 $37.89 $34.05 Total Basket Price $30.81 $28.70 $28.82 Note: Data based on pricing study done by Kantar Retail. Six retailers located within a five-mile radius of each other in the Northeast U.S. were selected. For each retailer, Kantar Retail assessed the lowest price point available to the shopper in each of 21 categories (trial sizes were excluded) so that she could minimally meet her purchase requirement. Pricing study performed in September 2013. Source: Kantar Retail analysis © Copyright 2014 Kantar Retail 28 How Well Do Shoppers’ Perceptions Match Reality? Pretty well, with a few exceptions Note: Actual price of total basket based on pricing study done by Kantar Retail. For each retailer, Kantar Retail assessed the lowest price point available to the shopper in each of 21 categories (trial sizes were excluded) so that she could minimally meet her purchase requirement. Pricing study performed in September 2013. Source: Kantar Retail analysis and ShopperScape ®, November 2013 © Copyright 2014 Kantar Retail 29 Walmart Goes Head-to-Head on Price © Copyright 2014 Kantar Retail 30 Shopper Showdown: Walmart vs. Key Competitors Price Leadership Perception Among Monthly Shoppers of Retailers (among monthly shoppers of both Walmart AND competitor, % who say Walmart/competitor is the price leader) Source: Kantar Retail ShopperScape®, November 2013 © Copyright 2014 Kantar Retail 31 Changing Price Leadership Perceptions Key Takeaways • Though we’ve seen a shift toward other aspects of “value” in recent years, price is still the paramount consideration –As more shoppers look to maintain spending levels and adopt some limiting behaviors in 2014, price is likely to become more important • Walmart has the strongest price leadership perception overall, but there are some rocky spots –Leadership position slipping in non-perishable grocery and HBC –Loses (often handily) to key competitors in fresh grocery –Price leadership position strongest among “core” Walmart demographic groups, but growth will depend on winning with other shoppers (young, affluent) • Internalization of deal-seeking mentality reflected in price leadership perception gains for many supermarkets © Copyright 2014 Kantar Retail 32 A Look at Loyalty Programs © Copyright 2014 Kantar Retail 33 Spending Less Most Important to Shoppers Loyalty cardholders more concerned with value Convenience vs. Value Spending as little as possible top factor when shopping ~75% of loyalty card and non-loyalty card shoppers ranked it among top four Arrows in chart indicate significant difference between column percentages at a 90% confidence level. Source: Kantar Retail ShopperScape®, November 2013 © Copyright 2014 Kantar Retail 34 Loyalty Card Participation Mostly Steady Across Retailers: More Have Cards vs. 2012 Balance Rewards gaining traction since September 2012 rollout Increase in participation vs. 2012 *Read as: 49% of shoppers surveyed in November 2013 reported having a CVS ExtraCare card. Arrows indicate significant difference vs. 2012 (90% confidence level) ¹Dillons, Fry’s, King Soopers, Kroger, QFC, Ralphs, Smith’s; ²Dominicks, Randalls, Safeway, Tom Thumb, Vons; ³Giant Foods, Stop & Shop; ⁴Acme, Albertsons, Jewel, Shaw’s/Star Market Source: Kantar Retail ShopperScape®, November 2012 & November 2013 © Copyright 2014 Kantar Retail 35 CVS ExtraCare Leads in Loyalty 15 year history and penetration give CVS the advantage • 275 million unique cards, 70 million active users – Well established among CVS shoppers Partnering with individual suppliers • Well developed & need-specific programs • Leveraging insights to hone assortments and drive shoppers to new categories across the box Source: Kantar retail analysis & store visits, company reports Encouraging collaboration b/t vendors & ExtraCare for solutions © Copyright 2014 Kantar Retail 36 One Year Later, Where Does Balance Rewards Stand? • Finding that though membership is high, actual usage is low – Shoppers find the program confusing – Not used to the points system • Now Walgreens is ready to shift the focus from registering to rewarding members Making the reward clear for shoppers, putting it into a measure they understand – Working on educating the shopper, making it easy for them to optimize the system Source: ECRM MarketGate, Kantar Retail analysis © Copyright 2014 Kantar Retail Kroger Continues to “Capture” Most of Own Shoppers with Loyalty Card Balance Rewards gains traction, while SVU Rewards loses shoppers due to store closures *Read as: 94% of Kroger shoppers have a Kroger loyalty card. Percentage point figures indicate ppt difference from November 2012. Source: Kantar Retail ShopperScape®, November 2012 & 2013 © Copyright 2014 Kantar Retail 38 Supermarket Loyalty Cards Still Generate Higher Satisfaction vs. Drug Though CVS, Walgreens are improving Arrows indicate significant difference vs. 2012 (90% confidence level) ¹Dillons, Fry’s, King Soopers, Kroger, QFC, Ralphs, Smith’s; ²Dominicks, Randalls, Safeway, Tom Thumb, Vons; ³Giant Foods, Stop & Shop; ⁴Acme, Albertsons, Jewel, Shaw’s/Star Market Source: Kantar Retail ShopperScape®, November 2012 & 2013 © Copyright 2014 Kantar Retail 39 But Do Loyalty Cards Really Generate Loyalty? Capture rates mostly down from 2012 % Loyalty Cardholders Who Spend the Most on Merchandise Group at Retailer Food / Groceries Kroger (all banners) Giant Eagle Advantage Card* Ahold (all banners) Safeway (all banners) Winn Dixie Customer Reward Card Food Lion MVP Card HBC Supervalu (all banners) CVS ExtraCare card Walgreens Balance Rewards Rite Aid Wellness+ 2012 2013 ppt difference 46% 44%** -2.1 46% 43% -3.1 30% 35% 5.0 39% 35% -4.4 30% 31% 1.1 31% 29% -1.9 25% 24% -1.3 19% 19% 0.5 17% 14% -2.9 11% 10% -0.8 *Low sample size (n = 84) **Read as: 44% of shoppers who have a Kroger loyalty card spend the most on food/groceries at Kroger. Source: Kantar Retail ShopperScape®, November 2012 & 2013 © Copyright 2014 Kantar Retail 40 Discounts Most Important to Shoppers While other factors carry pretty equal weight 39% of Safeway shoppers rate personalized pricing as a very important benefit Source: Kantar Retail ShopperScape®, November 2013 © Copyright 2014 Kantar Retail 41 Case Study: Safeway’s “just for U” WHAT: An enhanced loyalty program that provides a more digital and tailored shopping experience by organizing and personalizing the shopping experience according to what is most important to each shopper Personalized Deals Sale items chosen for shoppers based on basket history—shoppers get their OWN price on items they buy often Digital coupons, personalized shopping lists, weekly Club Card Specials Kantar Retail Analysis © Copyright 2014 Kantar Retail 42 JFU Demographics Steady from 2012 With some slight increases Safeway claims more than 6 million registered just for U users (Q2 2013 conf. call) Arrow indicates significant difference vs. previous year (90% confidence level) *The ShopperScape® survey is conducted online and in English only; Hispanics in this sample not representative of the full U.S. Hispanic population. Source: Kantar Retail ShopperScape®, November 2012 & 2013 © Copyright 2014 Kantar Retail 43 Safeway’s Personalized Pricing Boosts Price Perception Important pillar of “just for U” program +2 ppt +3 ppt +9 ppt +3 ppt Price perception among JFU members has increased across categories from 2012 Arrows indicate significant difference vs. all Safeway Club Card members (90% confidence level) *Includes Dominick’s, Randalls, Safeway, Tom Thumb, Vons Source: Kantar Retail ShopperScape®, November 2012 & 2013 © Copyright 2014 Kantar Retail 44 Program Resonates with Shoppers’ Values Deals, discounts, and ease All JFU Have-nots members (< $60,000) Sample size Spending as little money as possible Getting a “good deal” Stress-free shopping experience Haves ($60,000+) 296 149 147 Variety of coupons 77% 85% 70% Personalized deals offer good prices 76% 80% 72% Ease of adding coupons to my club card 75% 83% 68% Personalized deals are relevant 73% 81% 64% Ease of accessing account information 73% 82% 63% Ability of JFU site to help plan grocery trips 65% 76% 53% Satisfaction higher among Have-Not just for U members Shading indicates significantly greater percentage vs. all just for U members; border indicates significantly lower percentage (90% confidence level) Source: Kantar Retail ShopperScape®, November 2013 © Copyright 2014 Kantar Retail 45 Are just for U Members More Loyal? Fewer shoppers report shopping, spending more since joining just for U Shopping Spending “…mobile users [are] using the site more frequently, spending more money than those who are accessing the technology on a desktop computer.” -Safeway Q3 2013 conf. call Source: Kantar Retail ShopperScape®, November 2012 & 2013 © Copyright 2014 Kantar Retail 46 just for U App Usage On the Rise Especially among Have-Not shoppers Which of the following have you used to access or manage your “just for U” account? Have Nots (<$60,000) Shading indicates significant difference year-to-year (corresponding shopper segments); 90% confidence level 2012 Sample size 147 just for U Web site on a computer 89% just for U smartphone app 10% just for U iPad app 1% None of these 8% Source: Kantar Retail ShopperScape®, November 2012 & 2013 2013 149 80% 22% 5% 10% Haves ($60,000+) 2012 178 84% 27% 5% 6% 2013 147 81% 32% 6% 7% © Copyright 2014 Kantar Retail 47 Satisfaction Doesn’t Translate Into Trip Driver just for U more of a convenient bonus—especially among higher-income members Arrows indicate significant difference compared with all just for U members (90% confidence level) Source: Kantar Retail ShopperScape®, November 2013 © Copyright 2014 Kantar Retail 48 Takeaways/Implications • High participation and satisfaction with rewards programs still doesn’t guarantee true loyalty • Shoppers’ needs are pretty simple: They want to spend as little as possible, get a good deal, and have a frustration-free shopping experience. Communicating with retailers the importance of keeping it simple will resonate most with shoppers. • Personalized pricing is a best in class example of keeping it simple. Shoppers have almost unlimited options today—help shoppers simplify shopping routines by customizing their shopping experience for them in the form of relevant deals. • Even with the success of personalized pricing, JFU is still not a major trip driver for Safeway. © Copyright 2014 Kantar Retail 49 Digital Shopper Forum | February 25–26, 2014 | Chicago, IL Participate in interactive, thought-provoking discussions. Mention this webinar to save $100 off of your event ticket … Network with the who's who of your peers and the experts in the industry. *if your company doesn’t already have a block of prepaid event seats Learn from Kantar Retail experts' on the subjects of digital, shopper, omnichannel, and big data. For more info on this event, visit our website http://www.kantarretail.co m/digitalshopper2014/ Or, email us events@kantarretail.com © Copyright 2014 Kantar Retail Questions? Submit questions on Q&A panel on right side of screen • Shopping Approaches and Spending Priorities • Perceptions of Price Leadership • Loyalty Programs –Update on Safeway’s “just for U” Program © Copyright 2014 Kantar Retail 51 Contact: Rachel McGuire Senior Analyst rachel.mcguire@kantarretail.com Mary Brett Whitfield Senior Vice President Marybrett.whitfield@kantaretail.com T:+1 614 355 4036 www.kantarretailiQ.com T:+1 614 355 4010 www.kantarretailiQ.com Kate Senzamici Senior Analyst kate.senzamici@kantarretail.com T:+ 1 617 912 2886 www.kantarretailiQ.com © Copyright 2014 Kantar Retail