ecr europe forum '08. jointly agreed growth – driving the jag

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Jointly Agreed Growth (JAG)

The essence of JAGJAG Break-out sessionMay 28th from 11.45 AM to 1 PM

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Agenda

Agenda

Timing

11:50 - 12:05

12:05 - 12:40

12:40 - 12:45

12:45 - 13:00

Speakers

• Phil Humphreys (Diageo)• Sarah Bradbury (Tesco)

• Jens Weng (McKinsey&Company)• Jean-Albert Nyssens

(McKinsey&Company)• Company testimonials

• Phil Humphreys• Sarah Bradbury

• Facilitated by McKinsey&Company

Looking back (from 2016)to the Genesis of JAG

The essence of JAG

So what's next?

Q&A

22Source: ECR Europe Conference

Current negotiation model not focusedon shopper

How focused is the current negotiationmodel on the consumer and shopper, ondriving demand and generating growth?Percent of respondents

4

8

10

55

22

Heavily

A bit

Not really

Moderately

Not at all

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What’s ‘new’ about JAG?

•… a shopper and consumer-centricapproach aimed at improving category offer

•… a business plan to drive consumerdemand and generate sales growth forboth retailer and supplier

•… a three-year rolling business plan withannual reviews

•… a fact-based approach changing buyers’and sellers’ mindsets , behaviours andapproach to negotiation

JAG is …

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Partners need to overcome somebarriers to growth

Lack of strategic alignment

Lack of long-term visibility / focus

Fear of private label match impedingproduct introduction

Slow distribution of new products /general availability issues

Lack of KPIs to measure effectivereturn

Trade barriers

A Jointly Agreed Growth strategy

A 3-year framework plan

An agreed category strategy and set ofprinciples

Long-term integrated process avoidingsupply chain disruption

A set of agreed pre-defined growthcriteria, balancing financial, marketingand operational KPIs

Jointly Agreed Growth (JAG)

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JAG actions drive win-win-win growth throughgenuine innovation

Example

Traffic FrequencyTransaction

size

Olympic gamepromotion

• Opportunity towin ticket toShanghai

• Increased traffic

• Increased sales

Reduce cycle timefor toothbrush

• Improved dentalhealth

• Increased sales

• Increased sales

Premiumsmoothies versustraditional juices

• Healthierlifestyle

• Increasedbasket size

• Increased sales

Benefits• Consumer

• Retailer

• Supplier

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Conditionsfor

success

The JAG process

Step 1Review the economic andshopper environment

Step 3Define andagree on3-yearJAGplan

Step 4Execute theJAG plan

Step 2Review salesand agree on

prioritizedgrowth levers

Step 5Monitorand adapt

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The JAG process – Step 1

Step 5Monitor and

adapt


Conditionsfor success



Step 3Define andagree on 3-year JAG

planStep 4Execute the

JAG plan

•Develop commonunderstanding onoverall context forgrowth

•Build rationales tojustify growth targets

Objectives

88


Step 5Monitor and

adapt



Step 4Execute the

JAG plan


plan

Objectives

•Diagnose categorydynamics

•Understand whereincremental growthcomes from

•Select, estimatepotential financialimpact and prioritizegrowth levers for thecategory

•Draft action plan forpriority levers



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Step 5Monitor and

adapt



Step 4Execute the

JAG plan


plan

Objectives

•Finalize JAG plan byagreeing on:

–Sales uplift

–Investmentsallocation

–Activities

–Key performanceindicators (KPI) andJAG planmonitoring



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Step 5Monitor and

adapt



Step 4Execute the

JAG plan


plan



Objectives

•Ensure alignment onJAG plan

•Develop clearimplementation planthat ensures a fluentprogress ofexecution

1111


Step 5Monitor and

adapt



Step 4Execute the

JAG plan


plan



Objectives

•Ensure realization oftargets of JAGcollaboration:

–Review projectplans and monitorprogress

–Evaluate overallcollaboration

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Conditions for success

Trust between collaboration partners

Jointly Agreed Growth Agreement

People performance review

Information sharing

Sufficient and quality resources

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The JAG journey continues …

•Launch pilots

•Refine JAG manual based onexperience from pilots

•Develop JAG training program with ICI

•Further integrate ECR practices toaddress all growth levers

Next steps

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Pilots are currently being finalized

Who? Where? What category?

• Healthcare

• Spirits

• Coffee orconfectionary (TBD)

• Cosmetics

• Skincare

• Household items

• UK

• Eastern Europe

• Poland

• The Netherlands

• UK

• France, Spain & Italy

Many otherpilots are still

underdiscussion

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KPI Unit Year n-1 Year n Year n Year n+1 Year n+2 Year n+3 Do we use this KPI?(Yes/No)

Report frequency Source

Financial KPIs YTD Target Target Target Target

Category sales - Volume unitsCategory sales - Value EuroCategory Growth - Volume %Category Growth - Value %Market share of category at retailer %Market share of supplier in category %Sales per store UnitsSales per sqm EuroIncremental supplier sales EUR

Consumer / Shopper KPIs

Penetration %New category shoppers %Purchase frequency define timeRepeat Purchase %Loyalty %Shopper Satisfation (activity) %Shopper Awareness (activity) %Average transaction size Euro

Operational KPIs

lists a set of consumer, market, financial and productivity measures with the data source origin and the recommended report frequencyhttp://www.ecrnet.org/04-publications/blue_books/pub_2000_essential_guide_daytoday_catman.pdf

Consumer / Shopper KPIs

On-shelf availability

Assortment / Planogram

Product innovation

In-store activation/Promotions

The ECR Europe Essential Guide to Day to Day Category Management (Appendix 5)

Financial KPIs

Toolkit of templates available for participatingcompanies

Activities to support growth

Actions 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 n+1 n+2 n+3 n+1 n+2 n+3 n+1 n+2 n+3

Assortment / Planogram

Action 1

Action 2Action 3

Product innovation

Action 1

Action 2Action 3

In-store activation/ Promotions

Action 1

Action 2Action 3

On-shelf availability

Action 1

Action 2Action 3

TOTAL

Account Manager BuyerDirector DirectorVP VP

Retailer

Investments/Budget (Value -financial or not, e.g., GRPs)Responsible

Manufacturer

Year n+1 Year n+2… Weighted DistributionN° of Stores

Growth (%) n-4 n-3 n-2 n-1 n n+1 n+2 n+3GDPPrivate Consumption- Food- Beverages- Personal care- HouseholdOut of home food and beveragesHousehold disposable incomePopulationInflationHousehold savings ratioValue growth (%) n-4 n-3 n-2 n-1 n n+1 n+2 n+3HypermarketsSupermarketsConvenienceDiscountDrugstoresTotalRegion value share (%) n-4 n-3 n-2 n-1 n n+1 n+2 n+3Region 1Region 2Region 3Region 4Region 5Population segmentation (No.Of households)

n-4 n-3 n-2 n-1 n n+1 n+2 n+3

1 member household2 members household3 members household4 or more members householdGrocery shopping behavior n-4 n-3 n-2 n-1 n n+1 n+2 n+3Average No. of facia visited/yearOnly shop at one retailer (%)Shop at 2 fasciaShop at 3 fasciaShop at 4 fasciaShop at 5+ fascia

ForecastAchieved

n-2 n-1 n, YTD Year n n+1 n+2 n+3

SALES TURNOVER FOR SUPPLIER BRANDS IN CATEGORY (sell-out from retailer)Current Assortment (Total all growth activities to support sales)Linear growth (market/consumption growth rate), no specific initiativesIn-store activities (displays, features, in store media…)Price/ discountsAssortment Extension

- Existing products not previously listed at retailer (listed on market)- New products (to be launched)

Total (Current Assortment + Assortment Extension)

GROWTH RATE (%)Sales of Supplier brands in Category at retailerRetailer Category Sales nationwide

INVESTMENTS (Marketing, Trade, etc…) in VALUEManufacturerRetailer

LOGISTICSInventory TurnoverAnnual TurnsInventory Level (N° of Days)Service level

DISTRIBUTIONNumber of ChannelsNumber of StoresSales Weighted Distribution

SHOPPER METRICSPenetrationFrequencyLoyalty

RetailerAccount Manager BuyerDirector DirectorVP VP

Manufacturer

Achieved

Agreement on Growth Strategy and its relevant targets

Current Plan

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For further information…

•Marianne Dehousse,ECR Europe

•Phil Humphreys,Diageo

•Sarah Bradbury,Tesco

•Jens Weng,McKinsey&Company

•Jean-Albert Nyssens,McKinsey&Company

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

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Acknowledgements

ecr europe forum '08. jointly agreed growth – driving the jag

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