channel migration presentation

1 Copyright SymphonyIRI Group, 2010. Confidential and Proprietary. 1 Copyright SymphonyIRI Group, 2012. Confidential and Proprietary.

Times & Trends August 2012

Charting a Course on the Voyage for Value

Channel Migration:


Executive Summary

INSIGHT ACTION

Channel penetration and channel sales trends are evidence of the intensifying battle for share

of grocery spending

Drive purchase frequency and share with a value-oriented and localized assortment of

high-demand categories, such as meal

ingredients, meal components and low-cost

convenient meals

Step up frequency and granularity of consumer and market assessment in order

to anticipate and proactively address

changes in trip mission rituals

Develop and prominently tout a value proposition founded on the needs and wants

of primary and high-growth consumer

segments

Trends in number of channels shopped hint at a further honing of consumer shopping

strategies, where consumers confine their

CPG spending to a handful of channels that

they perceive as offering the greatest value

Trip frequency is slowing, while per trip spending is on the rise, marking yet another

change in trip mission strategies as

consumers continue to evolve their behaviors

in response to ongoing market and personal

financial considerations


Executive Summary

INSIGHT ACTION

Drug, dollar and club channels each captured share of CPG spending during

the past year, posting important gains

across CPG departments

The Internet is having a profound impact on CPG purchase behavior and quickly

gaining share of CPG spending

Invest to understand growth trends around the Internet as a shopping tool for

learning about and purchase of CPG

products, and how to align marketing

strategies to leverage this tool to

influence and inform your key shopper

segments

Closely monitor competitor strategies vis--vis new market entry to enable rapid

refinement/realignment of own strategies to

reflect evolving competitive landscape and

to protect and grow share across key CPG

categories and consumer segments


Trends around number of channels shopped are shifting, hinting at the possibility that

consumers may be limiting their spending to the channels that offer the greatest

perceived value.

# of CPG Channels Shopped

% of Consumers

2012

Five

24% Six

28%

Seven

19%

Eight

5%

One

1%

Two

2% Three

7%

Four

14%

Source: SymphonyIRI Consumer Network, 52 weeks ending 4/15/2012

% of Consumers Shopping Multiple Channels

By # of CPG Channels Shopped

2011-2012

Source: SymphonyIRI Consumer Network

Number of Channels

46.3% 46.7% 44.5% 49.2%

51.4% 50.9% 52.4% 48.9%

0%

50%

100%

Q3 2011 Q4 2011 Q1 2012 Q2 2012

10> 5-9


Supercenters and dollar stores are demonstrating healthy traction, and successfully

winning heavy shoppers from across competing CPG channels.

Source: SymphonyIRI Consumer Network Consumer & Shopper Insights Advantage (SIA), 52 weeks ending 4/15/2012

Supercenter & Dollar Channel Penetration

Point Gains Among Heavy Channel Shoppers

1.2

0.3

1.3 1.9 1.8

1.2 0.7

1.3 0.9

1.9

Heavy Dollar

Heavy Club

Heavy Mass

Heavy Grocery

Heavy Super

Heavy Drug

Supercenter Dollar Store

Grocery

Supercenter

Mass

Club

Drug

Dollar

98.5%

73.9%

74.5%

51.7%

78.7%

65.1%

(0.1)

+1.0

(2.0)

0.0

+0.1

+1.3

Channel 2012

Penetration

CPG Shopping Trends

% Households Buying by Channel

Point Change

vs 2011



CPG trip frequency has been on a slow decline during the past year, while per trip

expenditures have inched upward.

Average Purchase Occasions per Household &

Average Dollars per Purchase Occasion

All Outlet % Change vs Prior Year

-5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112

Purchase Occasions Dollars per Purchase Occasion



CPG trip behavior has been mixed across channels and trip missions during the past

year, with dollar and drug channels benefitting from fill-in and special purpose trends.

2012 Average Purchase Occasions per Household

% Change vs Prior Year

0.4%

6.0%

2.7%

2.1%

-3.2%

-2.4%

-0.4%

Convenience

Dollar

Drug

Club

Mass

Supercenter

Grocery

Retailer Trips by Trip Mission


-5.0%

-3.0%

-1.0%

1.0%

3.0%

5.0%

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Total Trips Special Purpose

Quick Trips Pantry Stocking

Fill In




Average basket size has been on the uptick during the past year, following several

quarters of strong declines; pantry stocking and fill-in trips have seen the strongest,

most consistent growth.

8.0%

0.4%

-2.1%

2.0%

-1.0%

-0.1%

2.6%

Convenience

Dollar

Drug

Club

Mass

Supercenter

Grocery

Basket Size by Trip Mission


-5.0%

-3.0%

-1.0%

1.0%

3.0%

5.0%

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Total Trips Special Purpose

Quick Trips Pantry Stocking

Fill In

2012 Average CPG Dollar Sales per

Purchase Occasion





Channel share has shifted slightly during the past year, with drug, dollar and club

channels each gaining ground at the expense of grocery and mass merchandise.

CPG Dollar Share by Channel*

Grocery

Supercenter

Mass

Drug

Dollar

Club

Specialty

47.9%

18.6%

5.7%

5.8%

1.9%

10.3%

6.7%

(0.3)

+0.1

(0.1)

+0.1

+0.1

+0.3

(0.1)

Channel 2012 Share Point Change vs 2011

*Note: Convenience channel excluded as data are not fully representative; share will not total to 100% as not all channels are highlighted

Source: SymphonyIRI Consumer Network, 52 weeks ending 7/8/2012


Department-level dollar share trends are quite mixed at the channel level, but the drug

and dollar store channels each captured share across CPG departments.

Dollar Share Point Change by Department

2012 vs 2011


Grocery Drug

Mass

Merchandise Supercenter Club Dollar Specialty

Beverages (0.8) +0.3 (0.2) (0.6) +0.4 +0.2 +0.6

Frozen (0.6) +0.1 +0.1 (0.2) +0.4 +0.1 +0.1

General Food (0.7) +0.2 0.0 0.0 +0.3 +0.2 +0.2

Refrigerated (0.3) +0.1 +0.2 (0.7) +0.5 +0.1 +0.1

Beauty (0.1) +1.5 (0.3) (0.1) (0.6) +0.2 (0.6)

General

Merchandise +0.2 +0.1 (0.6) +0.3 +0.2 +0.2 +0.2

Health (0.1) +1.0 (0.8) (0.2) 0.0 +0.2 +0.1

Home Care (0.3) +0.4 (0.6) (0.2) +0.2 +0.5 +0.1


The battle for share of spending across key meals, meal ingredients and meal

components is fierce, and significant shifts are occurring across CPG channels.

Dollar Share Point Change

Key Meals, Meal Ingredients & Components

Change 2012 vs 2011


Grocery

Mass


Flour/Meal (2.3) +0.3 +0.5 +0.5 +0.2 +0.9

Baking Mixes (0.6) +0.2 +0.7 (0.3) +0.1 +0.2

Pasta +0.7 +0.1 (0.8) (0.2) 0.0 +0.4

Soup (1.1) +0.1 +0.2 +0.2 +0.2 +0.5

Shelf Stable

Dinners +0.5 (0.1) 0.0 0.0 +0.2 0.0

Dry Packaged

Dinners (1.1) +0.1 +0.3 0.0 +0.2 +0.7

Butter +1.8 0.0 (1.2) (0.6) 0.0 0.0

Rfg Entrees (3.3) +0.7 +0.1 +2.1 0.0 (0.1)

Fz Plain

Vegetables (0.5) +0.4 (0.1) (0.1) +0.1 +0.1

Fz/Rfg Poultry +0.4 +0.2 (1.8) +1.0 +0.1 +0.2


Share of healthcare spending is shifting at the category level, with drug, dollar and

club each winning share across several of the 10 largest healthcare categories.


Key Healthcare Categories: Dollar Share Point Change

2012 vs 2011

Grocery Drug Mass Supercenter Club Dollar

First Aid Accessories (0.6) +3.0 (0.7) (0.1) (1.0) +0.5

First Aid Treatment (0.4) +1.6 (0.7) (0.1) (0.4) +0.2

Cold/Allergy/Sinus

Tablets (0.2) (0.6) (0.5) +0.2 +1.5 (0.1)

Gastrointestinal

Liquids +0.6 (2.2) (0.2) (0.3) +2.3 (0.2)

Gastrointestinal

Tablets (1.2) +0.3 (0.4) (0.8) +1.7 +0.2

Internal Analgesics (0.6) +2.3 (0.5) (0.5) (0.9) +0.4

Nasal Products (0.1) (1.7) (0.6) +1.0 +1.8 (0.2)

Vitamins +0.1 +1.9 (0.6) (0.8) 0.0 0.0

Weight Cntrl/Nutrition

Liq/Pwd +0.2 0.0 (1.2) (0.1) +1.5 +0.1

Home Health Care Kits +1.8 (2.1) (0.5) +1.1 +0.3 n/a


The dollar channel posted dollar sales share growth across the 10 largest

beauty/personal care categories while other channels posted mixed results.


Key Beauty/Personal Care Categories: Dollar Share Point Change

2012 vs 2011

Grocery Drug

Mass


Hair Conditioner +1.3 +1.1 0.0 (0.5) (0.2) +0.2 (1.7)

Shampoo +1.0 +1.0 (0.3) (0.5) (0.4) +0.1 (0.6)

Deodorant 0.0 +1.5 (0.4) (1.0) (0.8) +0.4 +0.4

Soap (0.1) (0.2) (0.4) +0.2 (0.1) +0.5 +0.1

Blades (0.2) +5.3 (0.7) (1.7) (2.5) +0.1 (0.3)

Skin Care +0.2 (0.6) (0.3) +1.2 (0.9) 0.0 +0.6

Diapers (0.3) +0.9 (0.3) +0.4 (2.5) +0.1 +2.0

Sanitary

Napkins/Tampons +0.1 +0.7 (0.1) (0.7) (0.2) +0.2 +0.1

Toothbrush/Dental

Accessories (1.1) +4.2 (1.0) (0.1) (1.7) +0.2 (0.7)

Toothpaste (0.2) +0.9 (0.3) (0.5) (0.4) +0.3 +0.2


The battle for share of alcoholic beverage sales is heating up across non-traditional

alcoholic beverage channels, evidenced by sizable share changes across channels

during the past year.

Key Alcoholic Beverage Categories: Dollar Share Point Change

2012 vs 2011

Grocery Drug

Mass

Merchandise Supercenter Club Specialty

Beer (1.8) +0.3 +0.1 +0.7 +0.1 +0.6

Premixed

Cocktails/Coolers +3.8 (0.2) +0.8 +3.1 +0.9 (8.0)

Spirits (0.2) +0.7 +0.1 +0.3 (0.7) (0.3)

Wine (0.6) +0.1 (0.2) +0.5 (0.2) +0.4

Non-Alcoholic

Mixers +0.8 +0.8 (0.9) +1.1 (0.8) (0.6)



Channel behavior across key consumer segments is mixed, with drug, club and dollar

channels posting widespread gains, while grocery, mass merchandisers and

convenience are showing flat to negative share growth trends.

Dollar Share Point Change by Consumer Segment

2012 vs 2011


Grocery Drug

Mass

Merchandise Supercenter Club Dollar Convenience

Under $35K (0.1) +0.2 (0.3) +0.2 0.0 +0.3 (0.1)

$35-$70K +0.1 +0.2 (0.2) (0.3) 0.2 +0.1 0.0

$70-$100K (0.1) +0.2 (0.2) (0.6) +0.8 +0.1 (0.1)

Over $100K (0.9) +0.5 0.0 0.0 +0.4 +0.1 (0.1)

Hispanic (0.7) +0.5 0.0 (0.5) +1.1 +0.2 (0.2)

Households with

Children (0.2) +0.6 (0.1) (0.6) +0.2 +0.1 (0.1)

Boomers (0.4) 0.0 (0.2) +0.2 +0.4 +0.1 (0.1)


Consumers use the internet for many shopping-related activities, and to buy a wide

range of CPG products.

8%

8%

13%

15%

20%

23%

30%

33%

35%

39%

I use social media sources (e.g., Twitter, Facebook) to research

I research products on blogs

I look for updates from retailers/manufacturers via email/text

I use social media sources (e.g. Twitter, Facebook) to get coupons

I visit online deal sites (e.g.,Woot.com, Groupon)

I research products on websites

I download coupons from couponing sites (e.g., SmartSource)

I download coupons from retailer websites

I download coupons from manufacturer websites

I download recipes off websites and other online sources

Digital Media Usage

% of Shoppers- Top 2 Box Responses

Source: SymphonyIRI MarketPulse, June 2012

13%

31%

32%

33%

33%

37%

37%

38%

40%

49%

49%

55%

Baby supplies

Beverages

Cleaning supplies

Medications

Pet supplies

Music

Toys

Other household items

Food

Personal care

Electronics

Books

What People Are Buying Online

% of Shoppers Who Bought the Product- Among Those Who

Have Shopped Online in the Past 6 Months

Source: Etailing Solutions, survey of 1,098 consumers


Identify new growth opportunities

and risks through ongoing

category and brand channel

migration tracking

Align distribution, marketing and

merchandising strategies with

channel migration patterns

Protect and grow share among

top shoppers

Conclusions: Manufacturers

Closely monitor shifts in trip mix and

at the account level

Constantly evaluate the evolving

competitive set at the channel and

retailer level, including traditional

brick and mortar and online retailers,

to understand channel share shifts

across key categories and brands

Invest to understand hidden potential

among shoppers by analyzing based

upon their habits, purchase response

and history with your own and

competing brands

Work closely with retailers that have

similar best shopper profiles to your

own

Align distribution strategies against

preferred trip types, channel

preferences and store locations of

your most important shoppers

Continue to enhance merchandising

and promotional strategies across

old and new media platforms to

ensure your value proposition is

beginning to impact the shopper in

the home, and is consistent

throughout the purchase process

Drive satisfaction, trips and basket

size with specially-targeted

promotional programs that entice and

reward top shopper segments

Work to secure optimal shelf space

and placement by demonstrating

category/brand value in basket

building


Conclusions: Retailers

Identify new growth opportunities

and risks through ongoing

category and brand channel

migration tracking

Align distribution, marketing and

merchandising strategies with

channel migration patterns

Protect and grow share among

top shoppers

Track shifts in trip mix at the market

level and across key shopper

segments

Constantly evaluate the evolving

competitive set at the market level,

including traditional brick and mortar

and online retailers to understand

channel share shifts across key

categories and brands, as well as

existing and emerging product

assortment strategies

Establish profiles of existing best

customers by creating discrete

behavioral segments based upon

their habits, purchase response and

history with competitors

Work closely with manufacturers that

have similar best shopper profiles

to your own

Ensure assortment and merchandise

strategies cater to your most

important shoppers preferred trip

missions and store locations

Continue to enhance merchandising

and promotional strategies across

old and new media platforms to

ensure your value proposition is

beginning to impact the shopper in

the home, and is consistent

throughout the purchase process

Drive satisfaction, trips and basket

size with specially-targeted

promotional programs that entice and

reward top shopper segments

Maintain a deep understanding of

emerging shopping patterns and

competitive threats among key

shopper and target segments

channel migration presentation

Documents

copyright symphonyiri

cpg channels

share of cpg spending

cpg departments

club channels

multiple channels

handful of channels

trip spending