U.S. Retailing and Consumer Trends 2009 V6 Retailing Part 1

Download Report

Transcript U.S. Retailing and Consumer Trends 2009 V6 Retailing Part 1

U.S. Retailing & Consumer Trends

July, 2009 Todd Hale SVP Consumer & Shopper Insights

Version 6 (1 of 3)

Topics

• Retailing Trends • Retail Channel Demographics • Buying Trends • Consumer Trends

U.S. Retailing & Consumer Trends

•

Retailing Trends

U.S. Retailing & Consumer Trends

Value & Convenience Winning as Evidenced by Increased Store Count

U.S. Store counts 1,419 fewer stores since end of 2007

Warehouse Clubs Supercenters Dollar Stores Mass Merch Supermarkets Drug 907 1,187 1,583 3,253 13,151 19,974 6,421 6,594 30,682 32,304 39,660 37,700 Convenience Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company 2001 2008

Supermarkets have not grown at the rate of other retail channels – no wonder the channel has lost shopping trips!

124,516 144,875

U.S. Retailing & Consumer Trends

Variety Winning as Evidenced by Increased Stores from Category Killers

U.S. Store counts

Toys R Us adding expanded consumables section in 260 of 600 stores Toy Stores Pet Stores* Bookstores Office Supply* Electronics* 2,458 999 1,328 2,565 1,613 2,522 2,816 3,699 8,598 8,157 Hardware Home Improvement* 14,309 17,806 Liquor 41,169 43,080 Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company Source:

USA TODAY

Competitive pressure has had negative impact on Toy Stores & Electronics; look for significant store closings in many of these channels in 2009

2001 2008 * Counts reflect chains – not independents

U.S. Retailing & Consumer Trends

Walmart & Target Leading Store Expansion versus Major Grocers

U.S. Store counts Due to economic slowdown, Target & Walmart to cut back expansion in 2009 & 2010

Wal-Mart - Corp* 3,219 4,244

Closing 50 poor performer s in early 2009

Target - Tot Kmart - Tot Kroger Corp Grocery 1,056 1,689 2,088 1,348 2,433 2,484 SuperValu Corp Grocery Delhaize Grocery 549 1,602 1,460 1,606 Safeway Corp Grocery 1,561 1,510 Publix Grocery 682 992 Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company *Includes Division 1, Supercenters, Neighborhood Markets & Sam’s Club

Target to aggressively expand food offering Kroger opens 83 rd Fresh Fare format, 3 rd under Kroger banner

2001 2008

U.S. Retailing & Consumer Trends

Walmart Sales Almost as Large as Next Four Competitors

Top 10 Grocery Chains

Meijer A&P H.E. Butt Delhaize America Publix Ahold USA Supervalu Safeway Kroger Walmart $0 $20 Source:

Progressive Grocer

– May 2009

$152.8

$40 $60 $80 $100

Est. Annual ACV (billions)

$120 $140

$146.3

$160

U.S. Retailing & Consumer Trends

2 Tier of Top Grocery Chains @ $58 Billion – $2 Billion Less Than Kroger

2nd Tier Top Grocery Chains

Wegmans Hy-Vee Military Albertson's LLC Save Mart Giant Eagle Trader Joe's Target Whole Foods Winn-Dixie $0 $2 $4 $6

Est. Annual ACV (billions)

$8 $10 Source:

Progressive Grocer

– May 2009

U.S. Retailing & Consumer Trends

Some Big Players Going w/Smaller Formats

Source: Company websites,

Reuters

Orange County Register

U.S. Retailing & Consumer Trends

Neighborhood Market by Walmart - Still in Expansion Plans

Store Count

Avg. $ per Store Avg. Store Size Planned Growth

148

$30 Million 42,000 Approx. 10 per year

U.S. Retailing & Consumer Trends

Focus on Freshness & Prepared Meals

U.S. Retailing & Consumer Trends

Walmart Plans Growth in 15 Opportunity Markets

Eduardo Castro-Wright, president and chief executive officer of the U.S. division Wal-Mart Stores: “We call them opportunity markets because they are markets where we have a 3.9% share as opposed to our average of 8.9%,” he explained. “Those

15 markets represent 34% of total U.S. retail sales

size of the entire retail market in China and larger than Russia and India [markets] combined.” …nearly the Some of the chain's ability to grow in those markets will come from the

smaller “high efficiency” retail formats

Wal Mart is developing, he pointed out, “that would deliver much

high sales per square foot

and return on invested capital.” Source:

Supermarket News

U.S. Retailing & Consumer Trends

Aggressively Promoting “Unbeatable Prices” Billboard Located 2 Blocks From Target HQ???

U.S. Retailing & Consumer Trends

Aggressively Promoting “Unbeatable Prices” Billboard Located 2 Blocks From Target HQ???

While we question the authenticity of this photo, Walmart continues to be very focused on value & low prices. In a 7/1/09 full page ad in the

Cincinnati Enquirer

, Walmart made the following claims: “No one beats our Unbeatable prices.” “We will match any local competitor’s ads.”

U.S. Retailing & Consumer Trends

Investing in New Formats

Source:

Cincinnati Enquirer

U.S. Retailing & Consumer Trends

Great Example of a Retailer Marketing Value w/Frequent Shopper Cards

Source: Winn-Dixie website

U.S. Retailing & Consumer Trends

Kroger Providing Shopper Incentives to Earn Free Groceries & Gas Discounts

“It’s So Easy! With the 1-2-3 REWARDS® MasterCard®, you’ll earn:

1 point per $1 spent anywhere MasterCard is accepted 2 points per $1 spent in our stores (excluding fuel centers) 3 points per $1 spent on the Kroger family of quality brands Every 1,000 points = $5 in free groceries! Plus,

save up to 15¢ per gallon*

with a bonus fuel discount at participating stores**!

Rewarding

— Free groceries for every 1,000 points!

Easy

— Automatic reward certificates sent every three months for earned rewards

Smart

— No annual fee

Safe

— Zero fraud liability

Accepted

— Worldwide MasterCard acceptance for extra purchasing power when you need it” Source: Kroger website

U.S. Retailing & Consumer Trends

Coupons Back in Vogue

4.6 Billion 2.6 Billion 2008 2009 Q1 -7% +17% Q2 -1% +33% Q3 -3% ?

Q4 +10% ?

Source: Inmar CMS Promotions Services; excludes retailer coupons

U.S. Retailing & Consumer Trends

Increased Coupon Activity

Q4 08

% Change in Redemption

Overall Food +10% +21%

Q1 09 Q2 09

+17% +33% +22% +27% Non-Food -3% +9% +46%

Q4 08 Q1 09 Q2 09

% Change in Distribution

Overall Food +8% +16% +20% +16% +25% +31% Non-Food +3% +9% +12% Source: Inmar CMS Promotions Services; excludes retailer coupons

U.S. Retailing & Consumer Trends

E-mailed Coupon Offers

Source: Company websites

“access and save exclusive coupons from your phone or PC directly to your savings card!” U.S. Retailing & Consumer Trends

Digital Coupon Offers From Safeway

Source: Company website

U.S. Retailing & Consumer Trends

Cooking Videos Linked to Shopping Lists & Feature Activity

Source: Company websites Tips & Recipes to Save Money

U.S. Retailing & Consumer Trends

Niche Grocery Store Count Growth From Natural/Gourmet & Deep Discounters

U.S. Store counts

Whole Foods Trader Joe's 130 269 164 309 Aldi looking to add 75 stores in 2009; 2008 sales grew 21% Source:

The Wall Street Journal

578 Aldi Save-A-Lot 957 943 2001 2008 1,187 Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company

U.S. Retailing & Consumer Trends

Aldi Delivers Extreme Value For The Home

Interestin g tag line in these economic times Rolling out new Fit & Active Private Label brand featuring “Fit Facts” on product labels

Source: Supermarket News

U.S. Retailing & Consumer Trends

Save-A-Lot providing meal solutions for less than the price of a gallon of gas!

20 meal plans under $4.00 for a family of four Source: Save-A-Lot website

U.S. Retailing & Consumer Trends

In These Tough Times, Flexibility is Key Save-A-Lot providing meal solutions for less than the price of a gallon of gas!

20 30 meal plans under $4.00 $5.00 for a family of four Source: Save-A-Lot website

U.S. Retailing & Consumer Trends

Meal Deals are Everywhere – Next Generation of Recipe Marketing

Source: Company websites

U.S. Retailing & Consumer Trends

Source: Company website

U.S. Retailing & Consumer Trends

Fresh From Our Kitchen to Your Oven

– Oven-Ready Entrees, Side Dishes & Desserts Source: Company website and

Progressive Grocer

magazine

U.S. Retailing & Consumer Trends

Jewel-Osco Driving Value in Their Perimeter & Throughout the Store

Source: Jewel-Osco flyer

U.S. Retailing & Consumer Trends

Manufacturers: Pitching “Value” & Increasing Ad Spending

Search-engine optimization when consumers type “cereal” plus “deals” or “value”, Kellogg's Web site will pop up The original dollar menu campaign. 10 cans soup for $10 Jointly promoting with Kraft: soup & grilled-cheese sandwiches 15-second TV commercial for Kool Aid showing how four pitchers of Kool-Aid cost same as a two liter bottle of soda Local word-of mouth campaign “So good for so little” First time in more than a decade, advertising Banquet frozen dinners “Nestlé Helps Makes Family Night Easy.” Free ice cream & DVD rental w/$15 purchase of select Nestlé brands

Source: Company Websites & Ads

Multimillion dollar campaign Using online & targeting individuals to a narrower focus of consumers Planning increase in ad spending & expanding number of brands it advertises, including Dinty Moore stews Announced plans to increase consumer marketing 8% to 12% in its new fiscal year as part of a two-year growth plan U.S. Retailing & Consumer Trends

Manufacturers: Positioning, Cause Marketing & Special Offers

“Best night cream, best eye treatment, hydrates better than even the $350 cream! Now save $5” “ The Beauty Secret is Out 70% of salon-brand users agree Pantene” —their brand didn’t beat “working to make this world a cleaner, healthier, better place…today, for the next generation and beyond.” Web site with consumer tips & on-line coupon & other promotional offers “ARM & HAMMER point of adoption” ® works with adoption shelters to provide valuable information and discounts at the

Source: Company Websites & Ads

“In a world of unachievable, airbrushed images, Dove is redefining beauty with the worldwide Campaign for Real Beauty” Oral & dental care information along with access to special offers w/capture of contact information for CRM initiatives “support program offers advice and counseling for smokers trying to quit using GSK's nicotine replacement therapy products” U.S. Retailing & Consumer Trends

Rapid Store Growth From Leading Drug Chains; Warehouse Stores Growing too

U.S. Store counts Opening 6 to 8 stores in 2009

2001 2008 BJ's

Decreasing openings from 495, 425 & 365 over the next three fiscal years

Costco Sam's Rite Aid 128 179 278 399 493 598 3,602 4,918 3,575 Walgreens 6,527 4,298 CVS Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company 6,456

U.S. Retailing & Consumer Trends

The Warehouse Club Treasure Hunt

U.S. Retailing & Consumer Trends

Significant Online Business From Club Retailers

“Savings of up to 30%* off supermarket prices” Source: Company websites

U.S. Retailing & Consumer Trends

Sam’s Club Focus on Small Business & Trial Programs to Build Membership

Source: Company website

U.S. Retailing & Consumer Trends

Coupon Savings, Trial Programs, Sampling & Club Cards All Part of the Experience

U.S. Retailing & Consumer Trends

Kraft & Sam’s Club Collaborate on “two week dinner plan”

Source: www.SamsClub.com

U.S. Retailing & Consumer Trends

Merchandising Wide Variety of Categories

Source: Company websites

U.S. Retailing & Consumer Trends

Walgreens Helping Shoppers in Many Ways

Source: Company website & newsletter

U.S. Retailing & Consumer Trends

Walgreens Café W – Back to The Future

U.S. Retailing & Consumer Trends

Walgreens Café W – Back to The Future

“Walgreens … will sell a limited selection of beer and wine at 70 percent of its 6,857 drugstores ...

Stores nationwide are being redesigned by department … in an effort to make them easier to shop … …will introduce more private-label merchandise, ranging from paper towels to over-the counter medications.” Source: Associated Press

U.S. Retailing & Consumer Trends

Convenience/Gas - Current Industry Landscape

• Still huge and fragmented, but consolidation starting • Single-store owners contracting • Foodservice rising to replace lost cigarette revenue • Industry counting on Foodservice to drive 2009 sales

U.S. Retailing & Consumer Trends

Top Ten Convenience Store Chains Dominated by Petroleum Companies & Franchise Operators

Store Count

The Pantry Sunoco CITGO Speedway SuperAmerica Couche-Tard ChevronTexaco Exxon Mobil Shell BP 7-Eleven 0 1000 2000 Source:

Convenience Store News

Hot top 100 – August 2008 3000 62% of top 100 stores from top 10 – off 61 units as oil companies divest or franchise retail operations 4000 5000 6000 7000 Company Franchise

U.S. Retailing & Consumer Trends

2nd Tier of Convenience Store Chains Dominated by Company-Owned Operators

Store Count

QuikTrip - Tulsa Delec Holdings Susser Holdings Racetrac Cumberland Farms Wawa Amereda Hess Kroger Casey's ConocoPhillips Valero 0 500 Source : Convenience Store News Hot top 100 – August 2008 1000

U.S. Retailing & Consumer Trends

3rd Tier of Convenience Store Chains Dominated by Company-Owned Operators Too

Store Count

Stewart's Getty Pilot Kwik Trip - La Crosse WilcoHess LLC Sheetz CHS Inc/Cenex Military Holiday Kum & Go 0 100 Source:

Convenience Store News

Hot top 100 – August 2008 200 300

U.S. Retailing & Consumer Trends

Single-Store C-Store Operators Drive 1% Decline in Store Count, but Still the Majority

2008

2008

38.2% 61.8%

144,875

2007

2007

38.0% 62.0%

146,294

2006

2006

38.0% Chain

Source:

Convenience Store News/

Nielsen TDLinx®

Chain 62.0% U.S. Retailing & Consumer Trends

April 24, 2020

145,119

Giant To Go – a Convenience Store or Small Grocery Store?

Source:

Supermarket News

and

Convenience Store News

U.S. Retailing & Consumer Trends

A Fun Place to Go for Food – Shoppers Use Touch Screens to Place Orders Source: Public Domain (store interior), company website (small images), Gary M. Baranec/

Associated Press

(touch screen)

U.S. Retailing & Consumer Trends

WaWa Drives Strong Food Service Business with Touch Screen Order Process too Source: Company website

U.S. Retailing & Consumer Trends

One of Five Convenient Store Divisions from Kroger Source: Company website

U.S. Retailing & Consumer Trends

7-Eleven Offering Meal Deals Too

Source: Company website

U.S. Retailing & Consumer Trends

BP Franchises – Food Service Focus in Channel Has Never Been Stronger

Source: Company website

U.S. Retailing & Consumer Trends

Rapid Store Expansion Within Dollar Channel

U.S. Store counts

Wal-Mart Corporate* Ninety-Nine Cents Only Fred's 129 280 307 652 1,654 Dollar Tree 3,219 4,244 3,507 3,942 Family Dollar Dollar General 5,162 Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company *Includes Division 1, Supercenters, Neighborhood Markets & Sam’s Club

1,025 new Walmart Corp stores since 2001, but 8,291 new Dollar Stores from these 5 chains

2001 2008 6,610 8,436 Source: Supermarket News

U.S. Retailing & Consumer Trends

Rapid Store Expansion Within Dollar Channel

U.S. Store counts

Wal-Mart Corporate* Ninety-Nine Cents Only Fred's Dollar Tree Family Dollar Dollar General 129 280 307 652 1,654 3,219 4,244 3,507 3,942 5,162

1,025 new Walmart Corp stores since 2001, but 8,291 new Dollar Stores from these 5 chains

6,610 2001 2008 Planning to open 450 new stores; up from 207 this past FY; remodeling or relocating 400 other stores 8,436 Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company *Includes Division 1, Supercenters, Neighborhood Markets & Sam’s Club Source: Supermarket News

U.S. Retailing & Consumer Trends

Dollar Stores Increasing Branded Focus; Expanding Price Points & Promotions Source: Company websites

U.S. Retailing & Consumer Trends

Strong Focus on Pets

Source: Company website

U.S. Retailing & Consumer Trends

Strong Focus on Pets, “Me-Too” Store Brands

Source: Company website

U.S. Retailing & Consumer Trends

Strong Focus on Pets, “Me-Too” Store Brands & Easy Meals

Source: Company website

U.S. Retailing & Consumer Trends

Shakeup of The Retail Landscape Announced Store Closings

• • • • • • • • • • • • • • • •

Rite-Aid – 117 (on top of 200 in prior fiscal) SuperValu – 50

•

Sear’s Holding – 24 Bruno’s – 10 Penn Traffic – 8 Sweetbay – 7 Sam’s Club (Canada) – 6 Bashas’ – 15 Balducci’s – 5 A&P SuperFresh – 5 Lane Bryant/Catherine's – 150 Sprint – 133 stores FYE – 130 Office Depot – 112 stores Zales – 105 Macy’s – 10

• Starbucks closing nearly 1,000 underperforming stores worldwide in less than 2 years Circuit City closing all 567 stores • Linens ’n Things – closing all 571 stores & shifting to online model

U.S. Retailing & Consumer Trends

Shakeup of The Retail Landscape Announced Store Closings

• • • • • • • • • • • • • • • •

Rite-Aid – 117 (on top of 200 in prior fiscal) SuperValu – 50

•

Sear’s Holding – 24

NEW YORK (Reuters) second largest U.S. mall owner, filed for bankruptcy protection on Thursday in one of the biggest real estate failures in U.S. history.

Starbucks closing nearly 1,000 underperforming stores worldwide in less than 2 years

Sam’s Club (Canada) – 6

• Circuit City closing all 567 stores Ending months of speculation, the Chicago-based mall owner, which listed total assets of $29.56 billion and total debts of • Linens ’n Things – closing all 571 stores & shifting to online model seeks to restructure some of its debt.

Sprint – 133 stores FYE

04/16/2009

Office Depot – 112 stores Zales – 105 Macy’s – 10 U.S. Retailing & Consumer Trends

Rate of Restaurant Openings Decreasing & Eclipsed by Closings

Dining Location Openings & Closings - Total U.S.

40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2004 2005 2006 2007 New

Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company; thru April 2009

Closed 2008 YTD 2009 U.S. Retailing & Consumer Trends

Dining: That was then...

2007 Same store sales trends (Year Ago % Change) McCorm. & Schmicks Applebees Ruth Chris Mimis Café PF Changs O'Charleys Outback Ruby Tuesday Bonefish Mac Grill On the Border Flemings Mortons Grill Concepts Buff Wild Wings BJ's Kona Grill Red Robin CPK Benihana Olive Garden Texas Roadhouse Grand Lux J Alexanders Cap Grille Landrys Cheesecake Fac Carrabas Chilis Maggianos Red Lobster Bahama Breeze 20 of 32 operators reported same store gains; Overall avg: +1% -10 -8 -6 -4

Source: Company Reports -NRN (Dec 22, 2008)

-2 0 2 4 6 8 10

U.S. Retailing & Consumer Trends

April 24, 2020

Dining: This is now!

Same store sales trends (Latest quarter % change) 30 of 32 operators reported same store losses Overall avg: -8.2% Mortons Guest Check Customer Traffic Olive Garden Texas Roadhouse Applebees Cheesecake Fac O'Charleys Red Lobster Grand Lux On the Border Chillis CPK J Alexanders Ruby Tuesday PF Changs Mimis Café Carrabas Grill Concepts Red Robin Bahama Breeze Landrys Kona Grill Outback Maggianos Mac Grill Benihana McCorm. & Schmicks Bonefish Cap Grille Ruth Chris Flemings -25 -23 -21 -19 -17

Source: Company Reports - NRN (May 11, 2009)

-15 -13 -11 -9 -7 -5 -3 -1 1 3 2008 BJ's Buff Wild Wings 5 7

U.S. Retailing & Consumer Trends

April 24, 2020

Store Closings – How Will They Impact Your Business?

 Opportunity for retailers to grab cheap property, expand store count and enhance market share  Threat to retailers relying on traffic draw from closed site(s) – be prepared to relocate quickly  Threat to manufacturer sales – be prepared to shift sales efforts to winning retailers

U.S. Retailing & Consumer Trends

Shopping Behavior Trends

• Retailers can grow their sales by: – Increasing their

shopper base

– Driving

shopping frequency

– Building

baskets

• Leveraging components

categories & brands

that impact one or more of these • Driving “need state” trip opportunities –

Health & wellness

–

Meal occasions

–

Large versus small trips

–

Time-starved consumers

U.S. Retailing & Consumer Trends

Value Winning As Evidenced by Consumer Acceptance

% Household Penetration

Conv/Gas Warehouse Supercenters* Dollar Drug Mass Merch 40 45 ** 50 50 51 59 64 68 Grocery Source: Homescan®, a service of The Nielsen Company; excludes gas only trips ** Note: Conv/Gas channel behaviors understated because of the high level of gasoline only buys & purchases of immediate consumables 2001 2008

Benefits from new store openings

81 86 79 95 100 99 *Includes Kmart, Target & Walmart

U.S. Retailing & Consumer Trends

Value Channels Grabbing Trips

Trips Per household

Warehouse Dollar Conv/Gas Drug 10 11 11 13 15 14 ** 15 14 Mass Merch 24 14 Supercenters* 20 26 Grocery Source: Homescan®, a service of The Nielsen Company; excludes gas only trips ** Note: Conv/Gas channel behaviors understated because of the high level of gasoline only buys & purchases of immediate consumables 59 2001 2008

Grocery & Mass trips continue to drop

72 *Includes Kmart, Target & Walmart

U.S. Retailing & Consumer Trends

Value Retailing Driving Price Compression

Average $ Basket Ring

Dollar Conv/Gas Drug Grocery Mass Merch Supercenters* $11 $14 $10 ** $19 $19 $24 $32 $41 $39 $49 $51 $65 Warehouse Source: Homescan®, a service of The Nielsen Company; excludes gas only trips ** Note: Conv/Gas channel behaviors understated because of the high level of gasoline only buys & purchases of immediate consumables $82 $100 2001 2008 *Includes Kmart, Target & Walmart

U.S. Retailing & Consumer Trends

Variety Winning as Evidenced by the Size of Alternative Channel Shopper Bases

% Household Penetration

Toy Stores Liquor Auto Pet Bookstores Office Supply Electronics 31 20 23 22 26 31 30 32 38 36 48 45 48 47 Department Hardware & Home Improvement Source: Homescan®, a service of The Nielsen Company

U.S. Retailing & Consumer Trends

April 24, 2020 70 78 77 74

Significant drop in shopper bases for Department & Toy Stores; declines in all category killers except Pet

Low Shopping Frequency in Other Retail Channels & Some Reductions

Trips per Household

Toy Stores Auto Office Supply Electronics Pet Bookstores Liquor Department Hardware & Home Improvement Source: Homescan®, a service of The Nielsen Company

U.S. Retailing & Consumer Trends

Shopping Baskets Vary, but Large Baskets in Many Alternative Retailers

Average Basket Ring

Bookstores Liquor Auto Pet Hardware & Home Improvement Office Supply Toy Stores Department Electronics Source: Homescan®, a service of The Nielsen Company $17 $25 $25 $33 $25 $34 $27 $37 $42 $51 $42 $51 $46 $59 $73 $86 $93 $112 2001 2008

U.S. Retailing & Consumer Trends

Value Retailers Outperforming Grocery, Drug, Mass & C-Store Trips – Grocery Trips Flat During Recession

-2 -4 -6 -8 -10 -12 % Change in Retail Channel Shopping Trips 10 8 6 4 2 0 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips Dollar Club Supercenter Grocery Drug Mass Merch Conv/Gas

U.S. Retailing & Consumer Trends

Online Retailing Driving Strongest Trip Growth

20 % Change in Retail Channel Shopping Trips 15 10 -5 -10 5 0 -15 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips Online Dollar Club Supercenter Grocery Drug Mass Merch

U.S. Retailing & Consumer Trends

Discretionary Retail Channel Trips Still Soft

% Change in Retail Channel Shopping Trips 20 10 0 -10 -20 -30 -40 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

U.S. Retailing & Consumer Trends

Continued Trip Compression From Lower Income, While More Affluent Showing Trip Growth in 2009

% Change in All Channel Shopping Trips 6 4 2 0 -2 -4 -6 -8 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 13 /0 9 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips $70K + $30 to $69.9K

< $29K

U.S. Retailing & Consumer Trends

More Affluent Shopping Grocery More Often & Account For Largest Share of Channel Sales

% Change in Grocery Channel Shopping Trips 8 6 4 2 0 -2 -4 -6 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

Share of Basket Ring Dollars* 41% 36% 23%

$70K + $30 to $69.9K

< $29K

* Latest Period U.S. Retailing & Consumer Trends

More Affluent Shopping Grocery More Often & Account For Largest Share of Channel Sales

% Change in Grocery Channel Shopping Trips 8 6 4 2 The heck with meal deals, how about recipe ideas, in-store demos and cooking classes in your stores serving affluent?

Share of Basket Ring Dollars* 50% of adults w/ incomes of $70k plus eating out less to save expenses – versus 46% for total adults 23% Source: 4/09 Nielsen Homescan Survey

$70K +

$30 to $69.9K

< $29K

-2 -4 -6 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

* Latest Period U.S. Retailing & Consumer Trends

All Incomes Increasingly Looking for Grocery Deals

% Change in Grocery Channel % Items on Deal 10 8 6 4 2 0 -2 -4 -6 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

% Items on Deal* 32% 31% 29%

$70K + $30 to $69.9K

< $29K

* Latest Period U.S. Retailing & Consumer Trends

More Affluent Driving Stronger Supercenter Trip Growth, but Only Drive 1/3 rd of Sales

% Change in Supercenter Channel Shopping Trips 12 -2 -4 2 0 10 8 6 4 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

Share of Basket Ring Dollars* 32% 40% 28%

$70K + $30 to $69.9K

< $29K

* Latest Period U.S. Retailing & Consumer Trends

Affluent Drive > Sales & > Trip Growth; Middle & Low Income Shopping Club More Frequently in ‘09

% Change in Warehouse Club Channel Shopping Trips 12 10 8 6 4 2 0 -2 -4 -6 -8 -10 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 9/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

Share of Basket Ring Dollars* 57% 31% 12%

$70K + $30 to $69.9K

< $29K

* Latest Period U.S. Retailing & Consumer Trends

Middle Income & More Affluent Finding Value in Dollar Stores, but Low Income Drive 46% of Sales

6 4 2 0 -2 -4 % Change in Dollar Store Channel Shopping Trips 14 12 10 8 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

Share of Basket Ring Dollars* 19% 35% 46%

$70K + $30 to $69.9K

< $29K

* Latest Period U.S. Retailing & Consumer Trends

Middle & Low Income Making Fewer Trips to Drugstores; More Positive Trip Growth by Affluent

-2 -4 -6 -8 -10 -12 % Change in Drug Store Channel Shopping Trips 10 8 6 4 2 0 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

Share of Basket Ring Dollars* 36% 37% 27%

$70K + $30 to $69.9K

< $29K

* Latest Period U.S. Retailing & Consumer Trends

Tough Year for Regular Mass Formats

% Change in Mass Merchandisers* Channel Shopping Trips 4 2 0 -10 -12 -14 -16 -2 -4 -6 -8 Share of Basket Ring Dollars* 30% 37% 23%

$70K + $30 to $69.9K

< $29K

07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending * Latest Period; excludes Supercenter formats

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

U.S. Retailing & Consumer Trends

Middle & Low Income Making Fewer Trips to Convenience/Gas

% Change in Convenience/Gas Channel Shopping Trips 10 5 0 -5 -10 -15 -20 07 /1 2/ 08 08 /0 9/ 08 09 /0 6/ 08 10 /0 4/ 08 11 /0 1/ 08 11 /2 9/ 08 12 /2 7/ 08 01 /2 4/ 09 02 /2 1/ 09 03 /2 1/ 09 04 /1 8/ 09 05 /1 6/ 09 06 /1 3/ 09 4-week period ending

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

Share of Basket Ring Dollars* 26% 36% 38%

$70K + $30 to $69.9K

< $29K

* Latest Period U.S. Retailing & Consumer Trends

•

Retail Channel Demographics

U.S. Retailing & Consumer Trends

Club Sales Skew to Affluent, C-Store & Dollar Sales Overdeveloped Among Lower Income

Distribution of Dollars

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

23 18 17 10 10 10 12

Total Outlets

36 22 16 8 7 6 5

Club

23 18 17 10 11 10 11

Mass

23 18 17 9 10 11 12

Grocery

18 16 16 10 11 13 16

Drug

15 16 18 11 12 13 15

Supers

10 13 14 11 13 16 24

C-Store <$20,000 $50,000-69,999 $20,000-29,999 $70,000-99,999 $30,000-39,999 $100,000+ $40,000-49,999 Source: Homescan®, a service of The Nielsen Company; UPC-coded purchases; 52-week period ending 12/27/2008

8 10 13 10 13 18 27

Dollar

U.S. Retailing & Consumer Trends

Supers Skew Toward Caucasian; C-Store & Dollar African American; Club & Mass Hispanics

Distribution of Dollars

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

12 9 11 22 78

Total Outlets CAUCASIAN

9 7 10 18 82

Supers

11 8 9 20 80

Grocery NON-CAUCASIAN

11 8 13 24 76 16 12 9 25 75

Drug AFRICAN AMER.

Club ASIAN

15 11 11 25 75

Mass

11 10 16 27 73

C-Store OTHER RACE HISPANIC Source: Homescan®, a service of The Nielsen Company; UPC-coded purchases; 52-week period ending 12/27/2008

11 8 20 30 70

Dollar

U.S. Retailing & Consumer Trends

Smaller Formats Attract Smaller Households

Distribution of Dollars

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

14 35 34 17

Total Outlets

17 39 29 15

Mass

17 37 35 11

Club

16 38 32 14

Supers

14 36 33 17

Grocery

15 33 32 20

Dollar

11 29 37 23

C-Store 1 MEM 2 MEM 3-4 MEM 5+ MEM Source: Homescan®, a service of The Nielsen Company; UPC-coded purchases; 52-week period ending 12/27/2008

9 29 38 24

Drug

U.S. Retailing & Consumer Trends

Dollar & Drug Skew to Older; C-Stores Attract Male-Only Households

Distribution of Dollars

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

15 12 15 23 17 17

Total Outlets

11 11 14 23 11 11 15 22 15 12 17 23 16 13 14 23 20 19 21 22

Mass Supers UNDER 35 55-64 Column 8 Column 11 Column 15

18 17 16 17

Club Grocery 35-44 65+ Column 9 Column 13 Column 16

U.S. Retailing & Consumer Trends

April 24, 2020

13 15 19 23 10 16 23 24 17 15 13 11

Dollar C-Store 45-54 NO FEMALE HEAD Column 10 Column 14

17 20 17 21 13 12

Big Box Retailers Attract Sales From Households With Kids

Distribution of Dollars

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

19 22 15 60 14 15 10 71 17 18 10 67 19 22 15 59 21 23 13 59 20 22 17 58 22 27 18 53

Total Outlets Drug C-Store Grocery Dollar Club Supers NONE < 18 ANY < 6 ANY 6-12 ANY 13-17 Source: Homescan®, a service of The Nielsen Company; UPC-coded purchases; 52-week period ending 12/27/2008

21 27 20 52

Mass

U.S. Retailing & Consumer Trends

Except for Convenience/Gas, Females Dominate Channel Trips – Males Increase Share in All Channels

Share of Retail Channel Shopping Trips Fe m al Ma le es s 46 75 74 70 66 63 63 25 26 30 34 37 37 54

Dollar Mass Supers Drug Grocery WHC Conv/Gas

Fe m al Ma le es s 45 73 72 69 65 61 61 27 28 31 35 39 39 55 2004 2009

Source: Homescan, a service of The Nielsen Company; 52-weeks ending 12/25/04 versus 52-weeks ending 05/30/09 Dollar Mass Supers Drug Grocery WHC Conv/Gas

U.S. Retailing & Consumer Trends

Higher Basket Values for Female Shoppers – Likely Those Making the Larger Planned Trips

Average Dollar Basket Size

D ol la r C on v/ G as D ru g G ro ce ry M as s S up er ce C nt lu er b

$8.93

$12.19

$10.35

$13.86

$18.15

$21.79

$27.49

$37.44

$34.55

$44.37

$45.36

$60.16

$80.48

$84.96

Males Females D ol la r C on v/ G as D ru g G ro ce ry M as s S up er ce C nt lu er b

$10.61

$13.99

$16.00

$20.34

$21.04

$24.96

$41.67

$43.50

$41.08

$49.17

$52.25

$69.12

$93.26

$99.49

2004 2009

Source: Homescan, a service of The Nielsen Company; 52-weeks ending 12/25/04 versus 52-weeks ending 05/30/09 Males Females

U.S. Retailing & Consumer Trends

•

Retailing Trends Summary

U.S. Retailing & Consumer Trends

“Great Recession” Driving Fundamental Shifts in Consumer Shopping

 Value retailers winning and will likely maintain preferred status for many as economy improves  Recovery for discretionary retailers will lag those in CPG-space  Accelerated industry innovation & collaboration  New formats  Store expansion  Meal deals  Value messaging and promotions  On-line engagements  New and expanded offerings  Diverse retail shopper bases enables opportunities to differentiate via assortment, pricing, promotion, & communication

U.S. Retailing & Consumer Trends

Thank You

[email protected]

Contributing Authors

• Doug Anderson • Patrick Barnard • Cindy Bonini • Wendy Bordewisch • Danny Brager • Tom Donato • Mark Elola • Michelle Engholm • Pam Leibfried • Steve Knight • Bill Petschow • Tom Pirovano • Mitchell Ross • James Russo • Mary Ellen Ryan • Scott Smith • Kimberly Vanderberry

U.S. Retailing & Consumer Trends

U.S. Retailing and Consumer Trends 2009 V6 Retailing Part 1

Transcript U.S. Retailing and Consumer Trends 2009 V6 Retailing Part 1

U.S. Retailing & Consumer Trends

Topics

Retailing Trends

Value & Convenience Winning as Evidenced by Increased Store Count

Variety Winning as Evidenced by Increased Stores from Category Killers

Walmart & Target Leading Store Expansion versus Major Grocers

Walmart Sales Almost as Large as Next Four Competitors

2

Tier of Top Grocery Chains @ $58 Billion – $2 Billion Less Than Kroger

Some Big Players Going w/Smaller Formats

Neighborhood Market by Walmart - Still in Expansion Plans

Focus on Freshness & Prepared Meals

Walmart Plans Growth in 15 Opportunity Markets

Investing in New Formats

Great Example of a Retailer Marketing Value w/Frequent Shopper Cards

Kroger Providing Shopper Incentives to Earn Free Groceries & Gas Discounts

Coupons Back in Vogue

Increased Coupon Activity

E-mailed Coupon Offers

Digital Coupon Offers From Safeway

Cooking Videos Linked to Shopping Lists & Feature Activity

Niche Grocery Store Count Growth From Natural/Gourmet & Deep Discounters

Aldi Delivers Extreme Value For The Home

Save-A-Lot providing meal solutions for less than the price of a gallon of gas!

In These Tough Times, Flexibility is Key Save-A-Lot providing meal solutions for less than the price of a gallon of gas!

Meal Deals are Everywhere – Next Generation of Recipe Marketing

Jewel-Osco Driving Value in Their Perimeter & Throughout the Store

Manufacturers: Pitching “Value” & Increasing Ad Spending

Manufacturers: Positioning, Cause Marketing & Special Offers

Rapid Store Growth From Leading Drug Chains; Warehouse Stores Growing too

The Warehouse Club Treasure Hunt

Significant Online Business From Club Retailers

Sam’s Club Focus on Small Business & Trial Programs to Build Membership

Coupon Savings, Trial Programs, Sampling & Club Cards All Part of the Experience

Kraft & Sam’s Club Collaborate on “two week dinner plan”

Merchandising Wide Variety of Categories

Walgreens Helping Shoppers in Many Ways

Walgreens Café W – Back to The Future

Walgreens Café W – Back to The Future

Convenience/Gas - Current Industry Landscape

2008

144,875

2007

146,294

2006

145,119

Giant To Go – a Convenience Store or Small Grocery Store?

7-Eleven Offering Meal Deals Too

BP Franchises – Food Service Focus in Channel Has Never Been Stronger

Rapid Store Expansion Within Dollar Channel

Rapid Store Expansion Within Dollar Channel

Strong Focus on Pets

Strong Focus on Pets, “Me-Too” Store Brands

Strong Focus on Pets, “Me-Too” Store Brands & Easy Meals

Shakeup of The Retail Landscape Announced Store Closings

Shakeup of The Retail Landscape Announced Store Closings

Rate of Restaurant Openings Decreasing & Eclipsed by Closings

Dining: That was then...

Dining: This is now!

Store Closings – How Will They Impact Your Business?

Shopping Behavior Trends

Value Winning As Evidenced by Consumer Acceptance

Value Channels Grabbing Trips

Value Retailing Driving Price Compression

Variety Winning as Evidenced by the Size of Alternative Channel Shopper Bases

Low Shopping Frequency in Other Retail Channels & Some Reductions

Shopping Baskets Vary, but Large Baskets in Many Alternative Retailers

Tough Year for Regular Mass Formats

Retail Channel Demographics

Smaller Formats Attract Smaller Households

Dollar & Drug Skew to Older; C-Stores Attract Male-Only Households

Big Box Retailers Attract Sales From Households With Kids

Retailing Trends Summary

“Great Recession” Driving Fundamental Shifts in Consumer Shopping

Thank You

Contributing Authors

Directory