Non-food as a business engine in

Food retailStephen Schueler

Procter and Gamble4 Feb 2011

P&G IN RUSSIA

Who wants to increase your market

share?

What determines your ability to drive market

share?

YOUR SHOPPER!

Top drivers to increase your market share:

Attract NewShoppers

Attract NewShoppers

Build Loyalty of Existing Shoppers

Build Loyalty of Existing Shoppers

Win with High Spenders

Win with High Spenders

WHY NON-FOOD

CATEGORIES ARE

IMPORTANT TO WIN WITH

SHOPPERS?

1.Non-Food has strong potential with

your existing shoppers

food

Dairy 59

Juice 49

Cheese 44

Biscuits 46

non-food

Hand Dish 28

Fem Care 31

Shampoo 32

Dentifrice 34

Size of the prize = 400 mln.$ Size of the prize = 400 mln.$ for HM channelfor HM channel

% of store shoppers buying category in this store (Hypermarkets)

% of store shoppers buying category in this store (Hypermarkets)

2. Non-Food helps shoppers to choose

your store for Bulk Shopping

Bulk shopping   Refill shopping

Laundry & Home Care Bakery

Coffee & Tea Milk& Dairy

Shampoo & Shower Fruits & Vegetables

Toilet Paper & Towels Soft drinks& Juices

Fem Care Cheese

Oral Care Fresh Meat & Poultry

Fresh Meat & Poultry Snacks

Cheese Toilet Paper & Towels

Soft drinks & Juices Coffee& Tea

Fruits & Vegetables Oral CareNon-food categories are highlightedNon-food categories are highlighted

Top powerful categories that define shoppers’ satisfaction

by the store:

Value of Bulk trip = 4.7x Value of Refill trip Value of Bulk trip = 4.7x Value of Refill trip

How to leverage non-How to leverage non-food food

to win with Your to win with Your ShopperShopper

Three Business Ideas:1. Improve Shopping

experience in Beauty Care.

2. Leverage Innovation in Non-Food − Attract new Shoppers− Get disproportionate share by

being first with new item.

3. Win with Young Families – Heavy Spenders

… win her man

Importance of: Russia

WE

Being attractive to men, %

90 41

Having stylish feminine clothes, %

89 57

She needs to be beautiful to… She needs to be beautiful to…

1.1. Russian consumers are Russian consumers are “Thirsty for Beauty” “Thirsty for Beauty”

P&G is committed to P&G is committed to

develop Beauty business in develop Beauty business in

RussiaRussia• Plays in 12 out of 13 Beauty Categories• Market leader in 5 out of 12• Focus on Category Development to drive

basket size

HAIR CARE EXAMPLE: Conditioners /Treatments – significant growth Potential vs Shampoo behind increase in penetration and consumption

• Plays in 12 out of 13 Beauty Categories• Market leader in 5 out of 12• Focus on Category Development to drive

basket size

HAIR CARE EXAMPLE: Conditioners /Treatments – significant growth Potential vs Shampoo behind increase in penetration and consumption

45 5288

335

0

50

100

150

200

250

300

350

Penetration CDI

CONDITIONERS

SHAMPOOS

P&G is committed to P&G is committed to

develop Beauty business in develop Beauty business in

RussiaRussia• Conditioner/treatment driven

innovation

• Trade Across through Shelving by collection: co-location of Shampoo/Conditioners/ Treatments

Category Turnover growth + 13%,

Category growth up to 6 %

Beauty Categories are the most Beauty Categories are the most sensitive to shopping atmosphere sensitive to shopping atmosphere

and new innovationand new innovation• Beauty Department Objective within Food retailer: Create better Shopping Environment:

• Enjoyable/emotional• Spends more time/ browsing • Trying new things

• Beauty Department Objective within Food retailer: Create better Shopping Environment:

• Enjoyable/emotional• Spends more time/ browsing • Trying new things

Diapers

Fabric Softeners

2. Attract new shoppers via 2. Attract new shoppers via innovationinnovation

45% of Russian 45% of Russian shoppersshoppers

are experience-driven. This means that they:• enjoy shopping and like shop around before making a purchase;• need a comfortable shopping experience;• are driven by new items.

are experience-driven. This means that they:• enjoy shopping and like shop around before making a purchase;• need a comfortable shopping experience;• are driven by new items.

Non-food suppliers are investing heavily Non-food suppliers are investing heavily in TVin TV

creating strong demand for new creating strong demand for new productsproducts

GRPs 30+ 2009 2010

Food 289 655 311 713

Non-Food 705 404 768 122

Non-food advertisers are highlighted

TOP 10 advertisers 2010 1 Procter & Gamble

2 Henkel Group

3 L'Oreal

4 Mars-Russia

5 Unilever

6 Nestle

7 Reckitt Benckiser

8 Danone

9 Wimm-Bill-Dann10 Beeline

1. In-Store Support – massive in-store communication linked to TV

2. On-line announcement of new product launches/marketing campaigns

Get Disproportionate share of New Get Disproportionate share of New Items!Items!

3. Winning with Young Families3. Winning with Young FamiliesChild birth is a point of change in values Now baby Child birth is a point of change in values Now baby

is #1, #2 and #3 spending priorityis #1, #2 and #3 spending priority

Now she has less time in her new role: =>she visits less stores and shop more in E-

commerce (Intensity Ind=124);

Now she has less time in her new role: =>she visits less stores and shop more in E-

commerce (Intensity Ind=124);

Spending IndexTotal

RussiaModern Trade

Young parents 113 112

Mature parents 120 101

Parents with teenagers 106 94

Families w/o children 121 97

Adults 87 108

Seniors 81 86

Families spend more, especially Families spend more, especially younger ones… especially in Modern younger ones… especially in Modern

Trade Trade

GFK, 2009GFK, 2009

Baby Diapers is the biggest categoryBaby Diapers is the biggest category

in moms basket in moms basket

GFK, 2009GFK, 2009

• Baby Diapers is the Destination categories for Young Moms

• Shoppers Basket is 4x times bigger in case diapers are in

• Baby Diapers is the Destination categories for Young Moms

• Shoppers Basket is 4x times bigger in case diapers are in Total Basket Spending on Baby, % in

valueTotal Basket Spending on Baby, % in

valueShoppers of Hypermarkets, 1HY 10   Moscow

Russia w/o Moscow

Diapers & Wipes 32,9 42,7

Baby Food 27,3 38,2

Clothes & Shoes 15,7 5,6

Other (incl. toys, cosmetics) 24,1 13,5

Pampers Charity programPampers Charity program

Partnering with Retailers and leading Partnering with Retailers and leading websiteswebsites

Pampers Charity programPampers Charity program

Partnering with Retailers and leading Partnering with Retailers and leading websiteswebsites

P&G donates 1 vaccine

for UNICEF with every

purchased pack of

Pampers

Communication tools:

- Internet (mail.ru)

- In-Store

In Summary

Key Partnership Opportunities to drive Non-Food in Food Retailer:

Bring in New Shoppers:

•Co-Marketing programs (e.g. Pampers Unisef)

•E-media partnership with Manufacturers

Drive Loyalty of Existing Shoppers:•Drive Basket via regimen Beauty Purchases

•Novelties exploitation in-Store;

• Improve Shopping Experience on Beauty

Attract Heavy Spenders•Win with Young Families by leveraging Diapers as destination

category

Thank you!Thank you!