RETAIL,
REDEFINED
NOVEMBER 2013
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
THE RECESSION WAS A WAKE-UP CALL
2009
2010-2013
Zzzz
2
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
THE CHALLENGE FOR GROWTH
3
CPG STILL SPUTTERING FOR GROWTH IN NORTH AMERICA
United States
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
+1.5
Dollars
+0.1
Units
Nielsen: ScanTrack - Total Tracked Sale
52 wks ending October 26, 2013
Canada
+1.6
+0.2
Dollars
Units
Nielsen: MarketTrack - Total Tracked Sale
52 wks ending October 19, 2013
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CPG GROWTH SLOWING OVER THE PAST 5 YEARS
Slow growth, driven only by inflation
$ % Chg
Unit % Chg
5
4
Inflation
+3
+5
2011
2010
+0
+2
0
+2
2
0
YTD 2013
0
0
2009
2008
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
1
2
2012
2
2
2
+2
Source: Nielsen MarketTrack, National All Channels – YTD 44 weeks to October 19, 2013 - Total Tracked Sales excluding Fresh Random Weight
5
2013 IS SHAPING UP TO BE A SLOW GROWTH YEAR
Slow growth, driven only by inflation
$ % Chg
Unit % Chg
5
4
Inflation
+3
+5
2011
2010
+0
+2
0
+2
2
0
YTD 2013
0
0
2009
2008
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
1
2
2012
2
2
2
+2
Source: Nielsen MarketTrack, National All Channels – YTD 44 weeks to October 19, 2013 - Total Tracked Sales excluding Fresh Random Weight
6
NOT ALL REGIONS ARE CREATED EQUAL
The Prairies lead regional growth – twice the National average
$ % Chg
52 week Regional CPG Performance
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
2
4
2
2
0
0
0
Unit % Chg
0
1
1
0
0
National Maritimes
Quebec
Ontario
Prairies
Source: Nielsen MarketTrack, National All Channels – 52 weeks Ending October 19, 2013 - Total Tracked Sales excluding Fresh Random Weight
B.C.
7
TRENDS IMPACTING GROWTH
Cyclical Changes
• Economy still fragile
• Cautious Consumer
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Structural Changes
• Value Motivators
• Retail, Redefined
• Evolving Consumer
8
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
VALUE REMAINS A KEY DRIVER OF SALES
$$$
9
SINCE BEFORE THE RECESSION, % OF RETAIL SALES
SOLD WITH A PRICE CUT HAS INCREASE 10 POINTS
% Dollars Sold on TPR
31%
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
27%
33%
34%
35%
37%
27%
An increase of $3.9 billion
But total sales only increased $3.5 billion
2007
2008
2009
2010
Source: Nielsen MarketTrack, National GB+MM+DG - 12 week periods ending June 29,, 2013
2011
2012
2013
Quarterly Periods
10
IT’S IMPORTANT TO REALLY UNDERSTAND
“INCREMENTAL”
Nielsen Innovation: Promotion Source of Volume
Market Expansion
Brand Switch
Incremental
Volume
Store Switch
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Time Switch
Subsidized Volume
Subsidized Volume
Non – Promoted Volume
Non – Promoted Volume
Past Paradigm
Purchase Behaviors
11
IT’S IMPORTANT TO REALLY UNDERSTAND
“INCREMENTAL”
Nielsen Innovation: Promotion Source of Volume
Market Expansion
Brand Switch
Incremental
Volume
New Paradigm
Store Switch
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Time Switch
Subsidized Volume
Subsidized Volume
Non – Promoted Volume
Non – Promoted Volume
Past Paradigm
Purchase Behaviors
12
WHILE PROMOTIONS ARE INCREASING RAPIDLY,
THE BENEFITS ARE NOT WHAT THEY SEEM
Retailer Benefit
Retailer Growth
Mutual Growth
22%
14%
Subsidization
Manufacturer Growth
42%
22%
LOW
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
HIGH
PROMOTIONAL IMPACT FRAMEWORK
LOW
Source: Nielsen Promotional Source of Volume Models
Manufacturer Benefit
HIGH
13
OUR STRATEGY NEEDS TO CHANGE
“
can I go,
but how low do I need to go
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
It’s not about how low
in order to stay profitable and create
win-win scenarios
”
14
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
TRADITIONAL RETAIL UNDER ATTACK
15
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
TRADITIONAL CPG ARE CHANNELS RELATIVELY FLAT
Conv & Gas*
Grocery
Drug
Mass Merch
less Zellers
+0%
-1%
-1%
-5%
+3%
Source: Nielsen Homescan Channel Watch – Canada - 52 weeks to September 28, 2013
*Convenience Tract 52 weeks to August 24, 2012 * Excluding Cigarettes
16
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
ELECTRONIC, DEPARTMENT AND OFFICE SUPPLY
STORES REPORT THE GREATEST LOSS
Conv & Gas*
Grocery
Drug
Mass Merch
less Zellers
+0%
-1%
-1%
-5%
+3%
Electronic
-12%
Department
-12%
Office Supply -11%
General Merch -4%
Hardware/DIY -2%
Source: Nielsen Homescan Channel Watch – Canada - 52 weeks to September 28, 2013
*Convenience Tract 52 weeks to August 24, 2012 * Excluding Cigarettes
17
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
E-COMMERCE, CROSS BORDER AND ETHNIC
GROCERY LEADS RETAIL GROWTH IN CANADA
Online
U.S. Stores
Ethnic Grocery
Pet Specialty
Warehouse
Health Food
+41%
+17%
+14%
+8%
+7%
+7%
Conv & Gas*
Grocery
Drug
Mass Merch
less Zellers
+0%
-1%
-1%
-5%
+3%
Electronic
-12%
Department
-12%
Office Supply -11%
General Merch -4%
Hardware/DIY -2%
Source: Nielsen Homescan Channel Watch – Canada - 52 weeks to September 28, 2013
*Convenience Tract 52 weeks to August 24, 2012 * Excluding Cigarettes
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ONLINE SHOPPING GAINING MOMENTUM
Online Shopping
• 1.5% share of Tracked Sales
 0.3% share of food (+150%)
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
+41%
• 39% of households (+30%)
 15% Buying Food (+106%)
• Spending $344 per year
$1.8 Billion
 $111 Food (+21%)
Source: Nielsen Homescan, National Total Expenditures, 52 Weeks Ending September 29, 2013
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Copyright ©2012 The Nielsen Company. Confidential and proprietary.
FUTURE GROWTH WILL BE FUELED BY CONSUMER
PREFERENCE FOR ONLINE SHOPPING
30%
18-24 year olds
Source: December 2012 Nielsen PanelViews Media Survey
Of consumers
prefer virtual store
shopping over
traditional retail
shopping
72%
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ONLINE IN THE U.S. FORECASTED TO BE 5% OF CPG
SALES IN 2 YEARS – AMAZON LEADING CONVERSION
Conversion Rates By Retailer
US Online CPG Sales ($ Billions)
2% of CPG sales
(Based on Site Visitation & Site Purchasing)
5% of CPG sales
60%
Baby Care
Food & Beverage
Health & Beauty
32
Amazon converts ~50% of site visitors
25
Brick & mortar ‘multichannel’
retailers convert 1 in 5
40%
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
20
12
2010
14
2011
16
20%
2012
2013
Source: Nielsen NetView Panel Analysis, January 2013
2014
2015
0%
Amazon
Walmart.com
Costco.com
Target.com
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ONLINE GROCERY SALES TO DOUBLE IN FIVE KEY
EUROPEAN MARKETS BY 2016
Britain, France, Germany, Switzerland and the Netherlands
Copyright© 2013 The Nielsen Company. Confidential and proprietary.
Online retailing in food and consumer goods is
growing at a phenomenal rate across Europe.
Technology is empowering people, fundamentally
changing the way they buy groceries
Joanne Denney-Finch, chief executive, IGD
Reuters (Berlin), Oct. 23, 2013
Source: Reuters
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SOME E-ROAD BLOCKS FOR CONSUMERS
74% feel the grocery store is more convenient
56% feel online retailer sites are difficult to use
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
27% do not believe assortment is greater online
25% agree prices are higher online
14% do not trust products sold online
Source: Nielsen Homescan, Panel Views Survey U.S. Q2 2013
23
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
DECREASING TRIPS BUT INCREASING TOUCH POINTS
SHOP HERE
24
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
MORE LOYALTY CARDS, BUT FEWER TRIPS
2008
2013
% of Canadians
94%
97%
+
Avg. # of Cards
5.8
6.3
+
Trips Per Year
208
173
Source: Nielsen Panel Views 2013 Loyalty Card Study: Homescan Total Expenditures – 52 wks to September 19, 2013
-17%
25
THE LOYAL, DISLOYAL SHOPPER
Average Loyalty to Store
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
The Opportunity
14%
Need to understand
what and where
your shoppers are
spending
the other 86%
Source: Nielsen Homescan: Top 10 Banners in Ontario - Avg $ Share of Requirements 52 weeks to Sept 19/13
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SHOPPING TODAY IS MORE ABOUT THE EXPERIENCE
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
53%
48%
48%
26%
Source: Nielsen Global Omnibus Survey Q1 2011, Q1 2013
Quality Fresh Produce
Quality Meat Department
Variety and Selection
Exclusive Events
Loyalty Programs
59% Value for Money
59% Promotions
55% Price
27
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
KEY TAKEAWAYS
•
Promote for Win-Wins: It’s not about spending
more, it’s about promoting and pricing smarter
for sustainable growth and profitability for both
the manufacturer and the retailer
•
Mix of Old and New: Online is growing but on a
small base. The role of digital needs to be
integrated with the overall shopping experience
•
Know your shopper: In order to build loyalty,
it’s important to understand what consumers
are buying outside of the store to meet new
unmet needs and demand.
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THANK YOU!
Stay Connected to Consumer and Media Trends
For the latest insights, visit nielsen.com
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Copyright ©2013 The Nielsen Company. Confidential and proprietary.
Questions regarding the content of this presentation, contact:
Carman Allison, email carman.allison@nielsen.com
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