fcg rtail ppt fianal con
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APresentation on
THE POST-RECESSION SCENARIOOF THE FMCG-RETAIL SECTOR
Presented To :Hay Group
Presented By :Nikita Jain
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WHAT IS RETAIL-FMCG INDUSTRY?
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Retail/FMCG Sector
FMCG are products that are sold quickly
at relatively low cost.
though the absolute profit made are relatively small,
generally sell in large quantities,
so the cumulative profit on can be large.
Alternatively called as CPG (Consumer packaged goods) it isexpected to reach US$ 175-200 billion by 2016.
FMCG industry is regarded as the largest sector in New Zealandwhich accounts for 5% of its Gross Domestic Product (GDP).
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WHAT ARE THE PROBLEMS OR ISSUES FACED BYTHE FMCG-RETAIL SECTOR POST-RECESSION ?
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KEY CHALLEGES POST-RECESSION-2010
Shortage of skilled manpower
High attrition rate (due to retirement, resignation or death)
Severe shortage of trainers.
Problems due to employee strikes
Need of human resource development has increased.
The primary challenges of this sector are as follows:
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KEY CHALLEGES 2010 (conti..)
Supply Chain Management
Frauds in Retail
Challenges with Infrastructure and Logistics
The greatest concern for the retail sector is getting
the suppliers in sync with the fast pace the retailers
have to maintain. They must keep stores properlystocked and deliver the perfect order every time.
They must balance the need for low costs, proper
inventory levels and maximum service.
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WHAT PROLEMS ARE BEING FACED BY THEBIG FMCG PLAYERS?
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c
The French-based company Carrefour Group is the worlds second largest retailer but No#1 in
Europe.
With over 15,000 stores in 34 countries and more than 475,000
employees
Currently operates in three major markets: Europe, LatinAmerica and
Asia.
It has 4 main store formats- Hypermarkets
- Supermarkets
- Hard Discounts Stores
- Convenience
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Sales of Carrefour
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During Recession Q-4:2008
c
2008 was a year of contrasts. In an
environment characterized by a
widespread slowdown in economic
growth in the 4th quarter in most markets
, and falling inflation in the food sector
over the course of the year, THE
CARREFOUR GROUP POSTED ASOLID PERFORMANCE
Lars Olofsson , CEO-CARREFOUR
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PROBLEMS ISSUES FACED BY CARREFOUR
POST RECESSION-09/10
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THE ECONOMIC CRISISWAS HAVING AN IMPACT ON THE PURCHASING
POWER ANDWAS DRIVING CUSTOMERS TO DISCOUNT CHAINS.
Stagnant sales in France
Declining profitability in France & Europe(2009)
Carrefour needs brand repositioning 01 Mar,2010 In Belgium, the chain of Carrefour supermarkets is in trouble. Fourteen out of fifty
six supermarkets are to be closed down due to miserable financial results which will
result in major layoffs of staff.
"The strike will cost a fortune. On top of that we will lose customers.We therefore
have every interest in ensuring the strike doesn't continue," Gerard Lavinay, the
company's executive director for Belgium told the local l'Echo daily paper.
HOW DID CARREFOUR COMPETE?
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CONSOLIDATED SALES INCLUDING VAT
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STRATEGIES ADOPTED BY CEO-Carrefour
Carrefour did not have a good pricing image and that image was certainly
misleading. Carrefour suffered from a real mismatch b/w its actual prices, which are
often among the best in the market, and its perceived price image.
It was vital that the group immediately regained control of the message
on this issue.
To do so Carrefour planed to :
conduct communications, in-store and advertising
Campaigns about our prices & promotions.
Offer our own brands at appropriate prices. A new discount rage of own-brand
products will soon appear on the shelves.
Lastly , lets not forget that the Carrefour group is a important player in the
convenience discount segment, with its Dia and Ed baners.We tend to expand this
format and regain the initiative in France as we have successfully done in other
countries, particularly Spain.
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STRATEGIES ADOPTED BY MD-Carrefour
Carrefour MD
Shafie Shamsuddin
25TH APRIL, 2009 : In Malaysia
At Carrefour, we approach the crisis as a bigopportunity.:
We developed a tool, the 4 ACs to protect our
profitability
1. Accept Crisis (AC),
2. Adapt Cost (AC),
3. Assist Customers (AC) and4. Activity Contributions. (AC).
5. Have a client oriented culture and innovate as much
as possible.
To serve and reward them for their long-term loyalty
and support, we reduced and pegged the prices of 45
basic necessities from Mar 13, 09 to Dec 31, 09 to
soften the impact of the financial crisis. The response
has been fantastic.
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STRATEGIES:2009Carrefour tailored a plan in which
They had three top priorities: Customers, Cost and Cash.
Want to keep a close relationship with their customers.
Plan to invest 600million Euros in their retail business
Develop competitive prices, promotion to customers
A 40% increase in their own Carrefour brand of products for gaining market share
Reduce their operating costs 500 million Euros as a part of transformation plan.
Reducing their stock levels from 37 to 35 days to free up the resources that they needfor growth
Accelerating convergence of banners under the Carrefour brand
Reinventing our hyper markets : by revitalizing their hard discount stores because theymeet consumer needs.
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RESULTS OF STRATEGIES
Lionel Laurent, 03 Dec ,09 : If investor approval was all Lars Olofsson, theCarrefour chief executive, was looking for, he certainly got it on Thursday.
Shares of the French retail chain soared nearly 6.0% in Paris, after the new
CEO outlined plans to spend 600.0 million Euros ($767.3 million) on
increasing Carrefour's price-competitiveness after a slowdown in France
and Europe hurt annual profits.
In 2010, in an environment that is likely to remain challenging, we will
consolidate these gains through flawless execution of the transformation
plan and strengthened sales dynamics in our key markets. Carrefour, with a
renewed and leaner organization and new management, will continue to
implement its strategy to attain its ambition: become the preferred
retailer. LARS OLOFSSON , CEO-CAREFOUR
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CURRENT EVENTS 2010: PRESS
France March 26th
, 2010 Carrefour launches new digital download site with
complete music, video game and software offeringcarrefour.fr/telechargement
France February 22nd, 2010 The Carrefour Group and TheWalt Disney Company
develop a line of Carrefour Kids food products with afocus on nutrition
France ,February 10th, 2010
Carrefour wins the Top Employeur (Top Employer)award for the second consecutive year in recognition of itsperformance in the field of human resources
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WAL-MART
Wal-Mart Stores, Inc. (branded as Wal-Mart) is an American
public corporation
Runs a chain of large, discount department stores.
Wal-Mart serves customers and members more than 200 milliontimes per week at more than 8,446 retail units under 55 different
banners in 15 countries.
With fiscal year 2010 sales of $405 billion, Wal-Mart employs
more than 2.1 million associates worldwide.
A leader in sustainability, corporate philanthropy and
employment opportunity,Wal-Mart ranked first among retailers
in Fortune Magazines 2010 Most Admired Companies survey.
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Relatively wellinsulated from
the credit crisis
and economic
decline.
Wal-Marts pricesare, on average,
10 percent lower
than competitors
prices. walmart
fact sheet
Wal-Mart Stores, Inc. again posted record sales and earnings for fiscal year 2008. Total net
sales for the Company were $374.5 billion, an 8.6 % increase over the previous fiscal year
and a record for any retailer. I am optimistic about our future because I know that
customers everywhere will continue to depend on Wal-Mart to save their money so they
can live better. And, we accomplished this during a quarter when most of retail was goingin the other direction
In 2008 it was the world's largest (No# 1)public corporation by revenue, according to the Fortune
Global 500 for that year.
Lee Scott
President and ChiefExecutiveOfficer
WAL-MART DURING RECESSION
Economies of scale andruthless efficiencies
allowWal-Mart to keep
prices so low that
competitors, found it
difficult to match them.
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ISSUES FACE BYWAL-MART POST-
RECESSION-2010
Wal-Mart sick-pay policy puts public at risk-ByAngela Woodall , Oakland Tribune, 01 Mar 2010
The sick-leave policy of the world's largest retailer, Wal-Mart Stores Inc., is putting the public at risk because
workers are not paid the first day they take off for an illness, even if it is a serious contagious disease, according
to members of several unions and labor watchdog groups.
Wal-Mart discriminates against women: The femaleplaintiffs in this case claim they have been paid and promoted less than their male Wal-Mart co-workers,
and the women are seeking back pay and punitive damages from the world's largest retailer.
Wal-Mart censors its products: Green Day has the most popularCD in the country, but you wont be able to find it at your local Wal-Mart. The band says the giant
superstore chain refused to stock its latest CD, 21st Century Breakdown, because Wal-Mart wanted the
album edited for language and content, and they refused.
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hj
WALMARTS
GLOBALSTRATEGIES-
2010
Remain committed to
being the price leader
in each market.
In the entertainment
category : continue to
improve brand offerings
and introduce newtechnology.
Pharmacy has been
redesigned to be more
customer friendly.
$4 prescription
program continues to
build customer loyaltyand gain broaderacceptance.
The International segment is
guided by three strategicinitiatives:
Create shareholder value
through portfolio optimization
EnhanceWal-Marts global
leverage
Win in each market
Growth: We will continue to grow around
the world. We have many opportunities to
grow by :opening new stores
entering new markets
making acquisitions
integrating online channels
developing new, innovative formats to
allow people to experience the Wal-Mart
brands.
Returns: We have a rich
heritage of delivering strong
shareholder returns. Each
operating segment is focusedon contributing to consistent,
strong company returns.
Leverage:We also
remain committed toleveraging operating
expenses and finding
additional ways to
increasingly benefit
from our global
expertise, talented
associates andcompany scale.
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Wal-Mart Reports Fiscal Year 2010 Results
"Walmart's exceptional
earnings for the fourth
quarter and the full year
exceeded our
expectations," said Mike
Duke, Wal-Mart Stores,
Inc. president and chief
executive officer. "These
results reflect the
ongoing underlying
strength of our business
and our strategies to
improve shareholdervalue through our
priorities - delivering
growth, leveraging
expenses and improving
returns.
Net sales were as follows (dollars in billions):Three Months Ended Years Ended
January 31, January 31,
--------------------------- ---------------------------
Percent Percent
2010 2009 Change 2010 2009 Change
--------------------------- ---------------------------
Net Sales:
Walmart U.S. $70.969 $71.293 -0.5% $258.229 $255.348 1.1%
International 29.572 24.751 19.5% 100.107 98.840 1.3%
Sam's Club 12.285 11.836 3.8% 46.710 46.899 -0.4%
--------------------------- ---------------------------
Total
Company $112.826 $107.880 4.6% $405.046 $401.087 1.0%
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CURRENT EVENTS-WALMART June 4, 2010: 500,000 new jobs worldwide in 5 years:Wal-Mart Stores Inc. said Friday it plans to
create 500,000 jobs throughout the world in the next five years, saying there is tremendousopportunity for growth globally.
May 14, 2010: Walmart increases giving in United States, Pennsylvania :Wal-Mart announced itscharitable giving in the United States totaled more than $467 million in cash and in-kind gifts in thefiscal year ending 2010.
In Pennsylvania,Wal-Mart gave more than $11.59 million to support non-profits like Shrines Hospitalfor Children, Make-A-Wish Foundation of Greater Pennsylvania and more than 90,000 bottles of water,
24,000 blankets, 27,000 tents and more than 127 million pounds of nutritious food -- the equivalent ofnearly 100 million meals, more than 20,000 units of medical supplies, such as gauze and surgicalmasks, were donated in response to the Haiti earthquake.
Walmart CEO Mike Duke Outlines Strategies for Building the "Next GenerationWalmart" :
Become a truly global company;
Understand the business challenges that retailers will face and solve them;
Play an even bigger leadership role on social issues that matter to our customers;Keep our culture strong everywhere.
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Our Company is so well positioned fortodays difficult economy and tomorrows
changing world.We have an exceptionally
strong management team, able to execute
our strategy, perform every single day,
and deliver results.
Michael T. Duke
President and CEO,WAL-MART Stores ,INC
. v ng e er s s mp y a resu o ose sav ngs
AtWal-Mart Stores, we know that our
customers want unbeatable prices on quality
brands in a fast, friendly, easy shopping
experience. Thats why our message is
clear:When you shop atWal-Mart, you
save money so you can live better.
The fact that we save our customers
money has long been part of our
DNA. Living better is simply a result of those savings
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Is the world's leading Nutrition, Health andWellness company.
It created the largest research and developmentnetwork in the industry, employing over 5,000scientists and technicians.
Nestl has a strong corporate culture which unitesmore than 278 000 people working in more than100 countries.
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Nestle DURING RECESSION
Vevey, Switzerland-based Nestl, owner of brands such as Kit-Kat, Gerber baby
food and Nescafe coffee, saw sales fall of 2.1% in 2009, to 107.62 billion Swiss
francs ($99.87 billion) from 109.91 billion francs in 2008.
Despite the very different challenges in 2008 Nestle had not only achieved,but even outperformed the nestle model , with organic growth at 8.3%.
Nestl has responded to recession by selling smaller, cheaper versions ofproducts in developing economies. So far, its move away from commodity items
seems to be paying off.
Paul Bulcke
CEO
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ISSUES FACED BY NESTLE Nestl union claim strong support for strike ballot:10th April 2010, The press, New York
Nestl is not employing (and certainly not employing in a responsible way) thousands of the workers making
Nestl products.
In the important growing Indonesian market for example, only 44% - significantly less than half - of the workers
making Nestl branded products in four factories and one warehouse are permanent Nestl workers. This is typical
of Nestl in Asia and other poorer regions of the world. And in Europe over 10% of workers in Herten Germany, for
instance, are agency workers making Nestl Herten productsbut not working for Nestl. In Hungary (Diosgyori)
over 20% are non-permanent, in Portugal (Avanca) over 25% and in the UK (York) almost one in eight workers are
not permanent Nestl employees
The IUF challenges Nestl to come clean with consumers and call their brand "Nestl hybrid" with the "hybrid"meaning product made by non-permanent or non-existent Nestl workers or made in non-Nestl facilities. If they
won't we challenge Nestl to take a close look at their employment practices so they can guarantee that branded
Nestl products are made in Nestl facilities by Nestl workers and managers on decent and permanent Nestl
work contracts.
Nestle workers voted overwhelmingly in favour of a ballot earlier this year, before the dispute over a proposed pay
freeze escalated into a national issue, and they have now been voting for a second time.
(The International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers
Associations (IUF) is an international trade union federation composed of 375 trade unions in 120 countries with an
affiliated membership of over 2.6 million members. It is based in Geneva, Switzerland).
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Global Rights for Global Nestl Worker (reported by):- The IUF July 10, 2009
For growing numbers of Nestl workers around the world, it's "Good Food -
Good Life Goodbye to Union Rights in theWorkplace". They call this
Nespressure - in the race to create "shareholder value" Nestl workers are beingleft behind.
Nestl in 2008 spent CHF 8.7 billion buying back its own shares on the stock
market in order to reduce the number of shares in circulation and boost the
earnings per share ratio.
That's over half of what the company claims to have spent on wages and
salaries, and nearly double the capital expenditure for the year! Together with
the enormous dividend hike, this is money that was not invested in research,
new capacity, training, improved wages and pensions or other benefits for whatNestl calls "our people".What it actually represents is the growing diversion of
enormous amounts of cash to shareholders, against a background of persistent
violations of trade union rights.
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On International Labour Day, 1 May 2010 ,Workers March in Panjang, Indonesia for Respect of Union Rights at Nestle
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NESTLES STRATEGIES- 2010
Employee Engagement ProgramTo help create an effective and efficient working environment:
Nestle will listen and respond to the views of their employees
Relaunched the Nestl & I global employee survey.
All Nestl people, at all levels of the business, will be invited to participate by theend of 2010, and their feedback will be used to launch initiatives to improve Nestl'sperformance around the world.
To maintain the spirit of localization, Nestle has updated the survey to have a verylocal flavor.With a small core set of global questions, markets can select additionaltopics for inclusion that best fit with their environment, as well as select the surveytiming to suit local circumstances.
The process will provide the possibility for managers throughout Nestl to accesstheir individual results, to allow for improvement activities to take place at all
levels, and tools to be made available to support action planning.
This new, enhanced survey will ensure nestle measures not only employeeengagement but also aligns with their strategic roadmap, their leadership and howthey enable employees to succeed. The relaunch process includes many more toolsto enhance and expand action on feedback throughout the organization.
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The Future-Nestle
(2010) Paul Bulcke, Nestl CEO: Our strong salesperformance in the first quarter confirms we are capturingopportunities in our different growth pillars, both inemerging and developed markets, even in a globaleconomic environment which remains challenging. By
keeping the initiative and with appropriate pricing, we arebuilding our market positions in different categories aspart of our long-term, disciplined commitment tosustainable, profitable growth. We continue to increase
investment in our brands, our innovation and newmanufacturing and distribution capabilities, and willfurther drive our efficiency programmes across the world.I therefore reconfirm our outlook for 2010, both top and
bottom line improvement.
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Nestle-CURRET EVENTS-2010 June 15, 2010 :An investment of CHF 60 million (1.6 billion roubles) for the construction
of a new stat e-of-the-art factory in Russia has been announced by Nestl.
June 8, 2010 : A social programme which helps small commercial businesses following
the Chile earthquake is completed by Nestl Chile.
May 27, 2010 : Over 70 delegates from 34 countries gathered to share experiences
and develop best practice models for the Nestl Healthy Kids Global Programme, on
26 May 2010.
Delegates included representatives from national health authorities, child nutritionexperts, NGOs and education experts who are working in partnership with Nestl to
deliver this important programme, which aims to raise Nutrition, Health and Wellness
awareness of school age children around the world.
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2010 & BEYOND :TRENDS IN GLOBAL FMCG
In developed countries , now retailers are practicing Vendor management inventory (VMI)
systems, where the supplier has access to the point of sales data of the retailer and plansautomatic replenishments responding to the stocks available to the retailer.
In sharp contrast, 90 per cent of retailers and 75 per cent of FMCG firms expect business
performance to reach or surpass target levels this year. Almost all FMCG companies (95 per cent)
and a majority of retailers (92 per cent) will provide a salary increase.
The Australian Market has matured with the explosion of digital marketing. The recovery process
of the economy has begun and its time to look to the future. 2010 is seeing the death of the
one-way websites which tend to lack personality, interaction and participation with brands to
prompt consumers to react in their favor.
There is a strong growth potential in areas of mobile and online advertising particularly in areas
such as mobile marketing, integrated content, social networking, electronic direct mail, display
advertisements.
Store design : Retailers are now concentrating on creating a customer-pull environment that
increases the amount of impulse shopping. Research shows that the chances of senses dictating
sales are upto 10-15%. Retail chains like MusicWorld, Baristas, Piramyd and Globus are laying
major emphasis & investing heavily in store design.
Marketers are going for Celebrity endorsements: the highest recall among consumers,
immediate positive impact on sales, new brand launches and re-introductions etc.
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THEEND
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