Transcript Kroger TL day 08192014

WHAT’S IN STORE
DRIVING GROWTH IN A SLOW GROWTH MARKET
James Russo SVP, Global Consumer Insights
October, 2014
STARTS AND STOPS WITH THE CONSUMER
Consumer Confidence Index – January 2002 through September 2014
113
120
110
100
90
86
80
70
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
60
50
40
30
25
20
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: The Conference Board; Nielsen supplied data as of February 2011
2
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
UNCERTAINITY PERMEATES OUR MINDSET
Nielsen Global Survey – 3Q14 U.S.
TODAY
2015
65%
52%
believe we are
still in a recession
believe we won’t get out
in the next
12 mo.
3
CONCERNS REMAIN, LESS INTENSE
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
More things change the more they stay the same
31%
21%
1) Economy
2) Jobs
3) Debt
1) Economy
2) Jobs
3) Debt
1) Economy
2) Jobs
3) Debt
4) Fuel Prices
5) Work/
Life Balance
4) Health
5) Food Prices
4) Health
5) Food prices/
Terrorism
2011
Source: Nielsen Global Surveys
2013
15%
Q3 2014
4
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
KEY ECONOMIC FACTORS SHOULD BUOY
SPENDING, BUT WAGE GROWTH LAGS
JOBS
EQUITY
PAYROLL TAX
INCREASE
HEALTH CARE
COSTS
INFLATION
HOUSING
GAS PRICES
WAGE
GROWTH
CONFIDENCE
CORPORATE
EARNINGS
IMBALANCE
MINDSET
5
FIVE YEARS OF RECOVERY HASN’T BOOSTED
INCOMES
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
Median household income in 2012 inflation adjusted dollars
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: U.S. Census Bureau
$55,987
$54,766
$54,127
$54,079
$53,891
$54,486
$54,892
$55,627
$53,644
$53,285
$51,892
$51,100
$51,017
$51,900
6
LACKLUSTER FMCG SALES
Results thru Sept 27, 2014
3.8
2.9
2.2
1.6
1.5
2012
2013
YTD 2014
0.2
0.4
Dollar Sales
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
2010
1.5
Unit Sales
2011
0.8
Source: Nielsen Answers; Total U.S. All Outlets Combined (XAOC + Convenience), All Departments, All Brands (UPC);
% Change, 13 week quarters (vs. year ago), plus YTD 39-weeks ending 9/27/2014 (vs. year ago)
-0.1
7
DRIVEN BY KEY CATEGORIES
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
All Outlets Combined (plus Convenience) – Unit Trend
Fresh Meat
Fresh Produce
Alcoholic Bevs
Deli
Dry Grocery
Dairy
Packaged Meat
HBA
Non-Food Grocery
Frozen Foods
General Merch
Total All Depts
10
4
3
1
0
-1
-1
-1
-1
-1
-3
0
Shouldn’t an economic recovery be delivering more unit growth?
Source: Nielsen Strategic Planner, Total U.S. – All Outlets Combined (plus Convenience), 52 weeks ending 07/05/2014 (vs. year ago), UPC-coded
8
Kmart
jcpenney
Family Dollar
Kohl's
Walmart
Target
Sam's Club
Macy's
Safeway
Petsmart
Dollar Tree
-6
Latest Year
2009
6
9
Source: Company press releases; monthly or quarterly news releases – excluding gas
Rite Aid
Nordstrom
CVS
Dollar General
Kroger
Lowe's
Whole Foods
Costco
Walgreens
-4
Home Depot
-2
-8
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
TURNAROUND FOR SOME
Same-Store-Sales – average growth
12
10
8
4
2
0
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
2014
NIELSEN HOLIDAY SALES
FORECAST
10
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
LEVERAGING TWO CUSTOM RESEARCH STUDIES
1. Nielsen consumer survey of over 25,000 demographically
representative households throughout the U.S. fielded
September 2014.
2. Sales forecast driven from an analysis of 92 categories
covering 5 departments representing over $100 billion in
sales.
•
Food, Beverages, Alcohol, HBA and Homecare using Nielsen
Scantrack – syndicated data, Nielsen Forecasting from Nov-Dec
11
SUMMARY OF THE SEASON
1
Nearly a qtr of CONSUMERS HAVE STARTED
SHOPPING, driven by women and young families. Men
and key growth segments plans to wait.
2
Spending levels are PROJECTED HIGHER than 2013 with
a forecasted dollar sale increase of 1.8%.
3
MULTICULTURAL HOUSEHOLDS are the drivers of those spending
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
more. This will be reflected in higher levels of online
spending and to a lesser extent; mass, toy, electronic and
grocery channels.
4
ONLINE channel is poised for even higher growth this season,
with traditional channels still being heavily shopped.
5
TOP GIFTS categories include: gift cards, consumer electronics,
toys and apparel.
12
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
MAJORITY OF HOLIDAY SPENDING EXPECTED BETWEEN
$250 TO $500, WHICH IS A 2 PT. INCREASE OVER 2013
Less than $50
$50 to less than $100
$100 to less than $250
$250 to less than $500
$500 to less than $1000
More than $1000
Total
all incomes
2%
7%
20%
32%
22%
7%
Incomes
<= $50K
3%
10%
27%
32%
14%
3%
Incomes
>=$50K
0%
3%
13%
33%
30%
11%
How much are you planning to spend while holiday shopping this year?
Would you say you plan on spending?
13
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
ONLINE, TOY AND ELECTRONIC STORES COULD SEE A
LIFT THIS SEASON
For each of the following types of channels, do you plan to spend more, about the same,
or less money for holiday gifts as compared to year ago?
20%
'12 planning to spend more
'13 planning to spend more
18%
'14 planning to spend more
16%
14%
12%
10%
8%
6%
4%
2%
0%
Online
Mass
Merch/Disc
Toy Strs
Dollar Strs
Cons Elec
Grocery Strs
Club Strs
Book Strs
Dept Strs
Liquor Strs
Drug Strs
14
For each of the following types of products, do you plan to spend more, about the same,
or less money for holiday gifts as compared to year ago?
15%
'12 Planning to spend more
'13 Planning to spend more
'14 Planning to spend more
13%
11%
9%
7%
5%
3%
1%
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uc
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ar
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-1%
G
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Copyright ©2014 The Nielsen Company. Confidential and proprietary.
GIFT CARDS REMAIN THE TOP HOLIDAY ITEM, WITH
TRADITIONAL CATEGORIES FOLLOWING
15
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
2014 HOLIDAY FORECAST:
HIGHER DOLLAR GROWTH THAN 2013
Holiday Forecast (Nov-Dec)
Dollars
•
•
Units
Department
09-10
10-11
11-12
12-13
13-14
09-10
10-11
11-12
12-13
13-14
Total
3.0%
4.6%
1.4%
1.2%
1.8%
1.4%
-1.0%
-0.6%
0.0%
-0.3%
Food
3.2%
4.9%
0.9%
1.9%
1.7%
1.6%
-1.5%
-0.8%
0.4%
-0.2%
Beverage
4.6%
5.5%
1.1%
-0.8%
2.6%
1.1%
-1.2%
-1.0%
0.5%
-0.2%
Alcohol
3.9%
5.4%
3.5%
4.9%
3.3%
3.9%
5.5%
2.6%
3.1%
2.1%
HBA
2.9%
3.7%
2.5%
0.2%
2.2%
1.3%
2.4%
0.8%
-1.4%
-0.1%
Homecare
0.2%
3.3%
1.7%
0.2%
0.3%
-0.1%
-0.7%
-0.5%
-1.3%
-1.7%
92 categories covering 5 departments with sales over $100 billion: Food, Beverage, Alcoholic
Beverage, HBA and Homecare
‘09-’10, ’10-’11, ‘11 – ’12, and ‘12 – ‘13 are actual values
Source: NIELSEN ADVANCED SOLUTIONS
16
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
WHERE DO WE FIND GROWTH IN A CHALLENGING
ENVIRONMENT?
17
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
1
Faster, Fresher, Better
18
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CONSUMERS PAYING MORE FOR LESS TIME SPENT
Faster
Fresher
25%
Meat +10%
Deli: +6%
Cheese: +3%
Frozen: -2%
Growth rate of
online CPG sales
in 2014
Source:
Nielsen Scantrack, Total U.S. All Outlets Combined (plus Convenience), 13 weeks increments (average unit price percent change vs. year ago), UPC-coded
Nielsen Perishables Group FreshFacts® U.S. Fresh Coverage Area (units)
Better
19
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
2
Wellness Required
20
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
GROW IT OR BUY IT:
CAPITALIZE ON AN UNSATURATED MARKET
Don’t be caught with a health and wellness void
The No. 1 global consumer concern
after the economy is HEALTH.
1/5
of all individuals are
looking to increase
energy levels
38%
of individuals were
engaged in some form
of weight
management
in 2013
Source: Nielsen Global Survey (4Q13) ; Nielsen Annual Ailment Survey 2013
1/4
of all people surveyed
want to improve their
heart health
21
HEALTH & WELLNESS OUTPACING RETAIL GROWTH
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
Average unit growth
-0.2%
13%
17%
Total store
Organic label
claims since 2010
Top 5 fastest growing
healthy label claims
Source: Nielsen Strategic Planner with Nielsen LabelTrends, Total U.S. - All Outlets Combined (xAOC), total store & top 5 based on 52-weeks ending 6/7/2014 vs. year ago; organic based on
average 4-weeks ending 7/10/2010 through 4-weeks ending 6/7/2014; UPC-coded
22
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
3
What’s In It For Me?
23
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
BUILD A REASON AND THEY WILL BUY
Sustainability
Customization
Niche
products
INCREASE
+5% IN SALES
Source: Nielsen Global Survey
24
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
CONSUMERS WILL PAY MORE IF THE BENEFITS
OUTWEIGH THE PRICE
Sources: MultiAd Kwikee, Target (k-cups) & company websites
25
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
4
The Great(er) Divide
26
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
THE “BASICS” ARE SUBJECTIVE
48%
52%
Living Comfortably/
Spending Freely
Afford The
Basics
What’s “Basic”?
Lower income consumers exhibit a huge
appetite for media, logging almost 25 more
hours than higher income consumers
Source: Nielsen NPOWER, Daytime M-F 9A-5P, November 2013, P2+
27
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
5
“We” Mentality
28
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
GETTING TO KNOW THEM
BOOMERS
MILLENNIALS
•
Control 70% of disposable income,
• Spend 82% of their income,
•
Nearly 50% of all CPG sales,
• 76% own a smartphone.
• Prefers repetition and contrast in
online ads
• Prefers stimulation from rich media,
and Intense color online ads
• Prefer clever, light-hearted humor
• Prefer off-beat, sarcastic and
slapstick humor.
•
By 2025, the number of people aged
65+ across the globe will increase by
290 million, a 52% jump
• By 2030, will make up 75% of the
workforce around the world
29
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
IMMENSE BUYING POWER CONTINUES TO
ENERGIZE THE U.S. ECONOMY
Multicultural Consumers
$1.6 trillion
$1.2 trillion
$1 trillion
$1.3 trillion
$1 trillion
$951 billion
$962 billion
$713 billion
$491 billion
$601 billion
$599 billion
$210 billion
$316 billion
HISPANIC
$274 billion
AFRICAN AMERICAN
$115 billion
1990
2000
Source: Selig Center of Economic Growth, 2012
2010
2013
2018
ASIAN AMERICAN
30
NEXT LEVEL INSIGHTS, HIGHLIGHT OPPORTUNITIES
% of Hispanic and non-Hispanic head of home by select household size
2 person
household
FOREIGN BORN
U.S. BORN
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
NON-HISPANIC
FOREIGN
BORN
22%
35%
52%
U.S.
BORN
NONHISPANIC
Grocery
-8%
1%
-9%
Mass
-4%
-1%
0%
Club
-1%
1%
+2
Drug
13%
11%
6%
Dollar
6%
6%
2%
C-store
23%
-11%
2%
% change in basket spend across channels 2013 vs. 2012
Source: Pew Hispanic Center
31
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
6
Shopping Less, Engaging More
32
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
FIND YOUR BEST OUTLET TO BE SEEN AND HEARD
2008-2009
158
annual shopping
trips
2013
141
1 billion+ log in each month
231 million log in each month
31% own a tablet (+486% in 2 yrs)
67% own a smartphone (+49% in 2 yrs)
annual shopping
trips
Source: Nielsen Consumer Panel
33
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
ONLINE FOOD SPENDING STILL IN ITS
INFANCY
Have NEVER
purchased
online
Prefer to
purchase
IN PERSON
GENERAL
FOOD
GENERAL
FOOD
85%
78%
% WHO HAVE MADE A PURCHASE, 41% USE A SMARTPHONE, 39% A TABLET
The Harris Poll of 2,241 U.S. adults surveyed online between June 11 and 16, 2014.
34
COMPETITION HEATS UP FOR SAME-DAY DELIVERY
IN SELECT MARKETS
TARGET ROLLS OUT SAME-DAY DELIVERY
TO BOSTON, MIAMI, AND MINNEAPOLIS
IN JUNE 2014
GOOGLE BEGAN TESTING A SAME-DAY
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
DELIVERY SERVICE WITH PARTNER
RETAILERS IN EARLY 2013; EXPANDED TO
L.A. & NYC IN MAY 2014
WALMART BEGAN TESTING ‘TO GO’
IN SELECT MARKETS SINCE 2011;
EXPANDED TO DENVER IN OCTOBER 2013
Source: Target, Google, Walmart
35
AMAZON GOING AFTER REGULARLY SCHEDULED BUYS
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
AMAZON GOING AFTER
REGULARLY SCHEDULED BUYS
COMPETITION HEATS UP
W/AMAZON PRIME PANTRY
“THE NEW WAY TO
SHOP FROM HOME”
Sources: https://www.amazon.com/gp/subscribe-and-save/details/index.html
http://www.amazon.com/gp/browse.html/?node=5856180011
https://fresh.amazon.com/dash
36
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
FRESHDIRECT ONLY ONLINE GROCERY WHO
“SURPASSED EXPECTATIONS”
FreshDirect earns top marks in a
comparison of eight online
grocers, outshining such big
names as AmazonFresh, Google
Shopping Express and Peapod in a
study by Wells Fargo Securities
and web design firm Fluid.
Internet Retailer
Apr. 15, 2014
Source: Internet Retailer
37
TRADITIONAL RETAILERS MAKING AN IMPACT ONLINE
PEAPOD EXPANDS NUMBER OF PICK UP LOCATIONS
“Ahold has a company-wide target to triple its online food sales by 2016”
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
HARRIS TEETER DEBUTS ANNUAL SUBSCRIPTION
$99.95 for the entire year, no limit to number of orders placed; curbside pick up
Sources: Ahold; Peapod; Crain’s Chicago Business; Chicago Tribune; Harris Teeter
38
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
7
More Choices, More Chances To Get Lost
39
MEDIA CHOICE DRIVES CONSUMER CHOICE
Average time spent per Adult 18+ per day
0:11
Q2 2014
4:36
0:31
1:07
1:25
2:45
0:03
0:09
0:09
Q2 2013
4:48
0:27
1:01
1:04
2:48
0:09
0:09
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Q2 2012
4:45
0:25
1:03
0:48
2:52
0:09
Live TV
Watching Time-shifted TV
Using DVD/Blu-Ray Device
Using a Game Console
Using Internet on a Computer
Using a Smartphone
Listening to AM/FM Radio
Using a Multimedia Device
Source: The Nielsen Cross-Platform Report Quarter 2 2014; Exhibit 1
40
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
8
Less Loyalty But
More Opportunity
41
OUTLET
BRAND
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
OPPORTUNITY TO ADDRESS LOYALTY LEVELS
22%
78%
Average Loyalty
The Opportunity
29%
71%
Source: Nielsen Homescan, top 10 banners based on CPG sales for 52 w/e 9/28/13, 1Q2013 global survey on loyalty - % saying completely loyal would not switch
42
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
9
Innovation 2.0
43
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
TRADITIONAL SUCCESS METRICS UNDER SCRUTINY
Launching New Products
Reinventing Mature Products
•
Capture demand earlier
•
Persevere with conviction
• Reinventing the best selling vehicle in
North America for the past 32 years
•
Cultivate support
• Infotainment and user interfaces
Source: Nielsen Breakthrough Innovation Report
44
INNOVATE WHERE IT MATTERS
Aging Population
Better For You
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
Multi-Cultural
Meals For 1 or 2
25% OF U.S. CONSUMERS WILLING TO PAY A PREMIUM FOR INNOVATIVE NEW PRODUCTS
Source: MultiAd Kwikee & company websites
45
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
10
Make A Big Impact
With Minimal Content
46
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
LESS CAN BE MORE, MUCH MORE
15
seconds
7
words
1
second
Number of 15-second television
commercials jumped more than
80% between 2008 and 2012
Oreo's Super Bowl Tweet: 'You
Can Still Dunk In The Dark'
1-second Miller commercial
with two words right before the
Superbowl started
Source: Nielsen Neurofocus, Ad Age
47
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
KEY TAKEAWAYS
PREPARE FOR LONG HAUL Despite continued improvement in the US economy, many
shoppers believe a full recovery will not be felt anytime soon
DEEPER UNDERTANDING OF YOUR CONSUMERS Segment consumers based on
product usage, shopping behaviors, and needs such as sustainability or online
drivers
BUILD LOYALTY Differentiate products on factors such as quality, taste and health
CONTINUOUS INNOVATION Align with deeper trends into trends such as wellness and
convenience
48
THANK YOU