Transcript Walmart’s Project Impact

THERE ARE 3 E’S IN
“THE TEENS”:
RETAIL PROJECTIONS 2010-2015
BRYAN GILDENBERG
CHIEF KNOWLEDGE OFFICER
© Copyright 2009 Kantar Retail
1
THE THREE E’S AND THEIR COUSINS,
THE THREE S’S
Shelf-Back
Thinking
Economics
Execution
Shopper
Insights
Emotion
Service
© Copyright 2009 Kantar Retail
THE THREE E’S AND THEIR COUSINS,
THE THREE S’S
Shelf-Back
Thinking
Economics
Execution
Shopper
Insights
Emotion
Service
© Copyright 2009 Kantar Retail
3
ECONOMICS – SPOT THE RECESSION
2012 IS THE NEW 2009
USA Formal Retail in $ Billions
CAGR '10E-'14E = 4.4%
$4,000
CAGR '04-'08 = 5.3%
$3,736
$3,750
CAGR '07-'11E = 0.6%
$3,589
$3,444
$3,500
$3,290
$3,286
$3,212
$3,250
$3,148
$3,077
$3,000
$2,750
$3,062
$2,876
$2,677
$2,500
2004
2005
2006
2007
2008
2009E
2010E
2011E
2012E
2013E
2014E
© Copyright 2009 Kantar Retail
4
POST RECESSION BEHAVIOR?
– 82% of U.S. consumers in one nationwide survey
said they intend to keep cooking at home instead
of eating out even after the economy improves
and they have more money to spend.
– 84% said they'll keep looking for specials in store
flyers
– 80% said they plan to use coupons as much as
possible
– 78% said they're determined to make fewer trips
to the store in order to save on gasoline.
Source: MVI analysis; Precima shopper survey, June 2009
© Copyright 2009 Kantar Retail
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KEY TAKEAWAY: RECALIBRATE THE
CONSUMER TARGET
– The old consumer is extinct
• Older consumers are modifying spending habits and
may never completely return to their old behavior – a
massive case of Post Downturn Shopping Disorder is
the norm
• Younger consumers will drive the economy in new
ways, based on new assessments of needs and wants
– Effective marketing and communication will have
different platforms, different messages, and will
have to address these new needs
• Supplier methodologies that are the same as they
were even a few years ago are likely incorrect
© Copyright 2009 Kantar Retail
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ECONOMICS:
THE POST-MODERN MARKETPLACE
– When real estate-driven outlet expansion growth is no
longer a sustainable path to growth, the path of
competition changes in fundamental ways
• Market segmentation and fragmentation to find
opportunity
• Intense focus on space productivity
• Shopper analytics become pervasive
• Fewer, deeper partnerships
• Customization for major customers increasingly
required
© Copyright 2009 Kantar Retail
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SQUARE FOOTAGE ADDED BY MVI CHAINS
2004-2011E
2008-2011E Avg:
52.5 MM Sq. Ft.
160,000,000
140,000,000
62% reduction!
120,000,000
MVI Chains:
Net Sq.Ft.
Added By Year
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
2004
2004-2007 Avg:
138.0 MM Sq. Ft.
2005
2006
2007
2008
2009E
2010E
2011E
Source: MVI Database
© Copyright 2009 Kantar Retail
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THE “BIG ASK” IS THE FIRST RESULT…
– A variety of retailers are deploying a variety of 3 letter
acronyms….
– The very power that makes them desirable customers
makes them dangerous and demanding partners
– When it looks like the pie won’t grow bigger, the retailers
with power in the marketplace will demand a bigger slice
of the pie
© Copyright 2009 Kantar Retail
9
ECONOMICS:
POST-MODERNISM = MORE WITH LESS …5 “WILL’S”
1. STORE: The median size of stores opening in the USA will
continue to come down
•
Smaller formats and smaller prototypes within customers
2. CATEGORY: The % of your square footage treated as a
“destination” will come down
3. OFF SHELF: For most retailers, off-shelf opportunities will
be more difficult to come by
4. ASSORTMENT: Most retailers will prefer expanded facings
to expanded SKUs
5. SKUS: Most retailers will increase their private label share of
shelf
Source: MVI analysis
© Copyright 2009 Kantar Retail
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RETAILER TRIPS/SHOPPER
BIGGEST GAINS AT WMT SC & DOLLAR STORES
Trips
2008
60
2009
Trips down at Kmart and flat at Walmart
Discount; otherwise are up across the board
48.9
50
51.4
46.7
44.3
40
Flat…
30
20
16.1
18.0
20.3 21.7
24.5
26.7
23.9 23.9
16.0 16.6 15.5 15.9 14.9 15.5
10.0 9.7
10
0
BJ's
Costco
Dollar
Stores
Kmart
Kroger
Sam's
Club
Target
Source: IRI Panel Data, Mid-Year 2008, 2009 (Heavy Shoppers, US)
Target SC WalMart
Trad
WalMart
SC
© Copyright 2009 Kantar Retail
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MORE FREQUENT TRIPS NOT NECESSARILY
GOOD NEWS FOR IMPULSE CATEGORIES!
– Evidence of a historic reversal in behavior
• Instead of most decisions being made on-store, most
decisions are made at home before ever going to the
retail outlet – as much as 70% of purchases are now
“planned”
• Combined with retailers changing philosophy
– Key Implications
• The call to action has to be part of the brand
• This only gets weirder as shopping gets more eyes
down with portable technology
• What’s the next generation of impulse?
© Copyright 2009 Kantar Retail
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ECONOMICS:
THOUGHTS ON A POST-MODERN MARKET
– Not just “Weird for the sake of weird”
• Moe the bartender on post-modern art!
– Square footage expansion will not be the core
driver of faster than market growth
• Suppliers: Space productivity
• Retailers: Format optimization/innovation
© Copyright 2009 Kantar Retail
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SHOPPER INSIGHTS: WHAT’S NEXT?
– “The retail competitive environment is moving from a prize
fight to a barfight”
– Rob Price, Chief Marketing Officer, CVS/Caremark
– The shopper insight conversation continues to move from
“who, where and how” to “what, how much and why”
© Copyright 2009 Kantar Retail
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TRANSACTIONAL DATA AND INTERNET RESEARCH
GIVE US TONS MORE INFORMATION…
What?
Who?
When? How Much?
YOU CAN OPTIMIZE WITH WHAT, BUT YOU
CAN’T INNOVATE WITHOUT WHY…
Why? Why Not? What Else?
What?
Who?
When? How Much?
SHOPPER INSIGHTS: CONCLUSION
– Adjacent formats may be the key to “share of
recovery”
• Take aim at the formats that lost trips
• Understand the attributes of those
formats that can be stolen by the retailer
that held onto the trip
– “I got 20 other brokers analyzing charts, pal.
I don't need another one…want another
chance? Then stop sending me information,
and start getting me some”
– Gordon Gekko, Wall Street
© Copyright 2009 Kantar Retail
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EMOTION: RETAILER BRAND OBJECTIVES:
RELEVANCE
– Brand – does it make sense?
– Operationally – can I do it?
CREDIBILITY
– Brand – what’s better about
buying it here?
– Economics – can I see how it
makes me money?
– Operationally – can I do this
better, faster or cheaper than
anyone else?
– Shopper – do I support this
type of decision?
– Economics – is this the best
use of this space?
– Shopper – does this attract a
profitable shopper for me?
Source: MVI analysis
© Copyright 2010 Kantar Retail
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EMOTION: RETAILERS AND PRIVATE LABEL
Leverage PL Image$
Trade Up
Incandescent
P o w e r
Finance
Brand
Reflective
Trade Down
Leverage National ImageBanner
Source: MVI analysis
Source: MVI analysis
M o t i v a t i o n
EMOTION:
THE RISE OF “FREE-RANGE” MARKETING
VS.
– Other directed
– Self directed with parameters
– Single point of consumption
– Multiple consumption points
– Timing static, planned,
controlled
– Timing dynamic, encouraged
and framed
– Fat chickens
– Happy chickens
© Copyright 2009 Kantar Retail
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CONCLUSIONS: FREE RANGE MARKETING
– Retail is a subset of a much bigger challenge:
• How do we develop brand when we don’t control the
medium it is being developed in?
– How do we know the chickens will eat what we want ‘em
to if they’re running around?
– New techniques critical
• Campaign management
• Shopper response to stimulus
• “Impression” understanding
– Retail and digital remain 2 sides of the same coin….
© Copyright 2009 Kantar Retail
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SERVICE: REDEFINING THE VALUE EQUATION
A NEW PRODUCTIVITY LOOP EMERGING?
Lower Prices
Higher margins
Lower Costs
Broad assortment
Increased
Velocity
Service
Increased
Profit $s
Sales velocity
• The in-store experience plays an increasingly important role and is
key to defining the retailer’s brand in the marketplace
Source: MVI analysis
EXECUTION
WHAT WILL CHANGE
– Optimized
Multiple
WHAT IT MEANS
– Ruthless self discipline
• SKUs
– More
Better
• Lines
• Brands
– Permanent
Rotation
– Scenario planning vs. ROI
– Flexibility, which means
– Standard
Tailored
• Better measures
• More transparency
Source: MVI analysis
• More general managers
© Copyright 2009 Kantar Retail
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“SHELF-BACK MARKETING” REQUIRES
“SHOPPER ECONOMICS” AND “D3C”
Pricing
Strategy
Sales =
Path To
Purchase
Out-ofStocks
(OOS)
Design For
Execution
Cost Reduction
Margin =
Assortment
Inventory =
Facings
Global Sourcing/Private Label/
Assortment Balance
Source: MVI analysis
Consistency
Continuous
Improvement
3 FINAL THOUGHTS: SHELF-BACK
MARKETING AND THE RETAILER’S BRAND
– Can we change channel the way we used to change
“channels”?
• Dynamic retail marketing spend/evaluation critical
– Store-back marketing requires walking many miles in the
retailer’s shoes, even for suppliers
• Economics and operations become a big part of marketing!
– Store-back marketing means understanding that someone
else is trying to use that space too
• Leveraging rather than eliminating PL becomes the
conversation
© Copyright 2009 Kantar Retail
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FORWARD LOOKING
– Those who don’t know how to break free of the past are
doomed to repeat it
• Optimization will not work for 2010/2011
• New ideas fueled by new inputs will win at retail
– Shopper insights are critical to taking our backwards process
and making them forward looking
– “The curse of the anniversary” will restrict many companies
looking to leverage opportunity in the next 24 months!
© Copyright 2009 Kantar Retail
26
THE THREE E’S AND THEIR COUSINS,
THE THREE S’S
Shelf-Back
Thinking
Economics
Execution
Shopper
Insights
Emotion
Service
© Copyright 2009 Kantar Retail
Bryan Gildenberg
Chief Knowledge Officer
[email protected]
10 Mountain View Rd
T +1 617 588 4124
Upper Saddle River, NJ
C +1 617 512 2866
07458
F +1 617 499 2723
www.mvi-insights.com
© 2009.Kantar. No part of these materials may be
used, reproduced or adapted without the prior
written consent of the copyright owner. All rights
reserved
© Copyright 2009 Kantar Retail
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