presented by: digital fdm shoppers, new healthcare shoppers, and performance gaps at target and...

Presented by:

DIGITAL FDM SHOPPERS, NEW HEALTHCARE SHOPPERS, AND PERFORMANCE GAPS AT TARGET AND WALMART

Rachel McGuireSenior Analyst

Kate SenzamiciAnalyst

Senior Vice PresidentMary Brett Whitfield

August 3, 2013

U.S. FDM Shopper Webinar Series

© Copyright 2013 Kantar Retail

Agenda

• Digital FDM Shoppers

• New Healthcare Shoppers

• Performance Gaps at Target and Walmart through a Shopper Lens

3


Who?Who?

How?How?

What?What?

CoverageCoverage

• 4,000 primary household shoppers per month• CORE SAMPLE: Representative sample of ~50,000

unique primary household U.S. shoppers annually• ALSO: Oversample of men for representative sample of males HOH 18+

(n = 800/month)

• Fielded online the third week of every month

• Survey fielded through LSR access panel of more than 3 million individuals

• Monthly and quarterly tracking questions on retailers and venues shopped, products purchased, where spent, near-term spending outlook, and household financial health

• Questions on timely and topical issues (including key holiday periods) affecting shopping behavior

• 200+ retailers across all sectors of retail

• 75+ product categories (e.g., over-the-counter medications)

• 7 major merchandise groups (e.g., health and beauty care products)

4

Kantar Retail ShopperScape®

4


Agenda



• Grocery Shopping Performance Gaps at Target and Walmart through a Shopper Lens

5


Use of Retailer Apps on Mobile Growing

6Source: Kantar Retail ShopperScape®, January 2012 and January 2013 (left) and May 2013 (right)

Accessed Retailer App on Smartphone (among all primary household shoppers)

Interest in Using Retailer App in Store to Make

Shopping for Groceries/HH Essentials/HBC Easier(% rating extremely/somewhat

important)

All Shoppers 16%

Gen Y 30%

Gen X 24%

Boomers 9%

Seniors 3%

2012: 7%

2013: 11%


Strong Desire to Use Apps: Grocery Shopping

• Strongest Appeal: View current sale/ad items

• Also popular:

– Access shopper card data/ discounts

– Locate item

– Make a list

– Stay on budget

– Get location-based deals

– As payment

More than half of all smartphone owners cite at least one app use as appealing as part of grocery shopping while in store …

7

Average # of app activities that are appealing: 2.4

Average # of app activities that are appealing: 2.4

Source: Kantar Retail ShopperScape®, May 2013


Gen Y Leads Interest in Adopting Apps

8

By Generation: Would Ideally Like to Be Able to Use Primary Grocery Store's Smartphone App While Shopping in Store to …

(among shoppers with a smartphone)

Source: Kantar Retail ShopperScape®, May 2013


Target Shoppers More Likely to Be Interested in Using Apps in Store vs. Walmart Shoppers

9Source: Kantar Retail ShopperScape®, May 2013

Significant difference between Target and Walmart shoppers

Would Ideally Like to Be Able to Use Target/Walmart’s Smartphone App While Shopping in Store to …

(among shoppers with a smartphone)


Drug Store Retailer Apps Attracting Users… but “converting” fewer than half of users

10

Percent of All Shoppers Who

Have App

Among Shoppers with App, those Who

Never Use Any of Key Functionality

Source: Kantar Retail ShopperScape®, August 2013


Walgreens App: Feature and Functionality Rich

Source: Retailer marketing materials, Kantar Retail analysis 11

Fast Rx refills, Rx management, myriad photo-related options


Use of Drugstore Apps Transaction OrientedVery functional; shoppers using digital in path to purchase

12Source: Kantar Retail ShopperScape®, August 2013

Ordered Rx refill (19%) Searched for coupons (17%)

Checked reward program (18%) Checked reward program (16%)

Browsed weekly ad (15%) Browsed weekly ad (15%)

Searched for coupons (11%) Shopped (9%)

Searched for a store location (8%) Made a shopping list (9%)

Shopped (7%) Checked for drug interactions (9%)

Top Uses of Leading Drugstore Apps in Past 6 Months(among smartphone shoppers with apps)


Online Shopping and Purchasing on the RiseConversion rates growing as well

13Source: Kantar Retail analysis, Kantar Retail ShopperScape®, July 2011 and July 2013

49%49%

Conversion Rate

Average Online Shopping and Purchasing across Categories*

* Across 30 categories tracked in ShopperScape®

50%50%

(among all shoppers, online activity at any retailer)


Shopping Rate Chg vs. 2011 (ppt)

Purchase Rate Chg vs. 2011 (ppt)

+0.8 ppt 0.0 ppt

+2.9 +2.6

-0.9 -1.2

+6.9 +5.9

+2.2 +1.4

+0.2 +0.6

+1.5 +1.1

+3.6 +2.2

+3.2 +2.6

+1.7 +0.4

+2.0 +0.5

+2.3 +1.7

+4.2 +2.1

+2.3 +1.1

+2.6 +1.9

More Online Activity for Most Categories Two consumables categories in top 10 shopped online

14

29%

22%

20%

19%18%

16%

15%14%

14%

13%11%

10%

10%10%10%

Source: Kantar Retail ShopperScape®, July 2011 and July 2013

Top Categories Shopped OnlineTotal

Shopping Rate



Consumables Grow Online Purchaser and Shopper Base

15

18%

14%

Shopping Rate Chg vs. 2011 (ppt)

Purchase Rate Chg vs. 2011 (ppt)

+2.2 ppt +1.4 ppt

+3.2 +2.6

+2.6 +1.9

+1.7 +0.8

+0.7 +0.3

+0.9 +0.9

+1.2 +0.8

+0.9 +0.4

+0.5 -0.3

+1.6 +1.0

+0.5 +0.2

10%

10%

10%

8%

6%

5%

5%

5%

5%

Online Shopping and Purchasing Rates for Consumables Categories

Total Shopping

Rate




Top Conversions Span from GM to Consumables

16

Conversion Rates Chg vs. 2011 (ppt)

+3.1

-2.6

-2.7

+4.5

+2.7

+0.5

-1.6

+4.8

+4.1

+1.7

+4.2

-1.0

-1.8

-1.5

+5.8

Some conversion drops … but vitamins/OTC and personal care among biggest conversion increases

Top Online Conversion* Categories

* Conversion calculated as % purchased online/% shopped online


© Copyright 2013 Kantar RetailSource: U.S. Department of Commerce, Kantar Retail analysis 17

4%7%

14%

Online Sales as Share of Total Category Sales

AVERAGE ACROSS CATEGORIES



All Categories Contribute to “Driving the Double”


How Digital Impacts the Brick & Mortar TripOnline-influenced expectations transforming demands at store level

Source: Kantar Retail analysis 18

Online activity influences nature of

trip and expectations of shopping experience


Key Takeaways

• Clearly in the “post-desktop” information age

• Mobile creating “perpetual purchase occasions”

– But shoppers still integrating mobile tools and functionality into routines

– Shopping apps not yet entrenched as “killer app” of mobile tools

• Mobile has key role in redefining retailer value proposition in a “world without walls”

Digital FDM Shoppers



Agenda




20

© Copyright 2013 Kantar RetailSource: US Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States 2011 21

% Population Without Insurance Highest Since 1998

Percentage of People Without Health Insurance in The United States from 1990 to 2011

Percentage of population


Health Care Reform 2014: Deciphering the Affordable Care Act

• Starting January 1, 2014 includes:

–Guaranteed coverage means that insurance companies cannot refuse coverage to anyone including sick or elderly

–Individual mandate which fines those that do not have coverage

–Cost assistance and subsidies to offset spend

–Unlimited coverage means there is no cap to health spending

Source: company & government websites 22

Estimated additional insured expected in 2014

14,000,000


Which Shoppers Are Prime Candidates?Have Nots, Hispanics, Gen Y-ers

Source: Kantar Retail ShopperScape®, February 2013 23

Health Insurance Coverage

All

ShoppersHave Nots (<$60,000)

Haves ($60,000+)

Hispanic* Boomers Gen Y

Sample size 4024 2371 1653 483 1487 610Through employer or private insurance 58% 40% 84% 59% 64% 54%Medicare or Medicaid 28% 38% 15% 18% 19% 15%I do not have health insurance 16% 23% 5% 22% 17% 24%Prefer not to answer 3% 4% 2% 3% 2% 7%

INSURED 86% 78% 99% 77% 83% 69%

Potential for more Rx transactions and store traffic from these groupsPotential for more Rx transactions and store traffic from these groups

Shading indicates significantly greater percentage vs. all shoppers; border indicates significantly lower percentage (90% confidence level)*The ShopperScape® survey is conducted online and in English only; Hispanics in sample are more acculturated and not representative of full U.S. Hispanic population


How Well Do Shoppers Understand?Admittedly, not too well…


Shoppers whom are most primed for ACA also have lowest awareness, understanding

Arrows indicate significantly greater percentage vs. all shoppers (90% confidence level)*The ShopperScape® survey is conducted online and in English only; Hispanics in sample are more acculturated and not representative of full U.S. Hispanic population


How Retailers Hope to Capture New ShoppersEducating, & positioning themselves as trusted advisors

Source: company websites, Kantar Retail analysis 25


Walmart, Walgreens, CVS Positioned to Gain Largest Shares of Newly Insured ShoppersEspecially Gen Y, Hispanic


Gen Y: 26%Hispanic: 27%



More than three-quarters of Hispanics (77%) and Gen Y-ers

(76%) plan to purchase prescriptions when they get

insurance

More than three-quarters of Hispanics (77%) and Gen Y-ers

(76%) plan to purchase prescriptions when they get

insurance

Arrows indicate significantly greater percentage vs. all shoppers (90% confidence level). Low sample for Hispanics (n=80); no statistical testing.*The ShopperScape® survey is conducted online and in English only; Hispanics in sample are more acculturated and not representative of full U.S. Hispanic population.


CVS Wins Overall Prescription Share of Preference

27Source: Kantar Retail ShopperScape®, June 2013

• Hispanic shoppers almost evenly split between CVS (24%) and Walgreens (23%)• CVS captures equal percentages of Hispanic and Gen Y shoppers (24%)• Gen Y shoppers favor CVS, though Walgreens is close behind (21%)• Almost as many Boomers get most scripts filled via mail/online (18%) as do at CVS (19%)

• Drug, Target win with Hispanic & Gen Y shoppers

• Walmart appeals to Have Nots

Can uninsured members of these cohorts be expected

to follow suit?

• Drug, Target win with Hispanic & Gen Y shoppers

• Walmart appeals to Have Nots

Can uninsured members of these cohorts be expected

to follow suit?

Spending Facts

Spending Facts


… And Currently Has Highest Prescription Capture RateDoes this guarantee success with newly-insured shoppers?

28Source: Kantar Retail ShopperScape®, June 2013


71%

11% 8% 9%

61%

11% 9% 13%

59%

10% 8%23%

54%

9% 8%29%

50%

8% 8%

35%

But Trend Likely to Shift Away from Drug

29

Favors shift to non-store/online ordering in long term

Source: U.S. Department of Commerce and Kantar Retail

Prescription Drugs: Share of Category Spending by Channel

CAGR2002–20072007–2012E2012E–2020F

7.0%2.7%5.0%

6.0%3.2%4.9%

6.9%2.1%6.2%

20.3%9.4%8.6%

TotalCategory

7.6%4.6%6.2%

1997 2020F2002 2012E2007

Drugstores, including HBC specialists

Grocery stores Big-box & small-box mass retailers*

Non-store, including online

Growth rates for food, drug, and mass channels in this category will still outpace

growth of most other store categories

Means impact on sales mix of store can

still be significant

Still means healthy growth for other channels over timeStill means healthy growth for other channels over time

*Includes big-box mass retailer formats such as supercenters, warehouse clubs, discount department stores/ mass merchandisers, as well as small-box retailers such as dollar stores and other discount formats


Added Prescription Trips = Opportunity to Draw Shoppers Throughout Store

Shoppers want more than just a pharmacy


Shoppers consider the entire shopping experience

when choosing where to get prescriptions filled

Shoppers consider the entire shopping experience

when choosing where to get prescriptions filled


A New Side to Retail: Shoppers Open to Some Medical Services at Retail

Hispanics, Gen Y are game; Boomers more wary

32Source: Kantar Retail ShopperScape®, February 2013

Across all services, Hispanic, Gen Y shoppers are significantly

more likely than all shoppers to be

very willing to use

Across all services, Hispanic, Gen Y shoppers are significantly

more likely than all shoppers to be

very willing to use

As store traffic increases,

pressure will be on suppliers to drive sales in the front

end

As store traffic increases,

pressure will be on suppliers to drive sales in the front

end


Expanding Pharmacy Services & ClinicsRetailers are ramping up clinic expansion, with CVS projecting 1,500 total by 2017

Source: Kantar Retail analysis, store visits 33

• Clinics allow retailers to offer convenient, and quick health services when shoppers would have to wait to see their PCP

• Services are clearly priced, making it more transparent and straightforward for the shopper

• Retailers are expanding the services they offer to include screening for different diseases, as well as consistent management for chronic conditions

• Capturing & catering to that repeat customer

Walgreens recently rebranded its Take Care Clinics to Healthcare clinics


Rite Aid Partners with NowClinic to offer Services

• In-store consultation rooms host computers to connect with NowClinic, a virtual clinic service that offers consultations with nurse practitioners and doctors via webcam

Offering virtual clinic areas in 70+ stores

Source: Kantar Retail analysis, store visits 34

Way for Rite Aid to offer the services it

needs to compete,

without the hefty investment


Takeaways/Implications• Impact of the ACA is a waiting game—for both shoppers and retailers. Shoppers do not

fully understand what the ACA means for them, and are unsure of how it will affect them. Retailers have to be proactive and establish themselves as trusted guides throughout the process. Suppliers can help in this effort—be an ally.

• Hispanic, Gen Y, and Have-Not shoppers are least likely to have insurance and are prime candidates for guaranteed health insurance. This means an increase in prescription sales and overall traffic to retailers. Important to think about how you communicate with these cohorts in order to maximize the trip.

• Shoppers are thinking about the full shopping experience when filling prescriptions—and a mere 15% of trips are only prescription focused. One-stop shopping and an easy experience are important. All categories gain more traffic as prescription trips increase (and shoppers are routed through the box to back of store). Aid shoppers in completing their easy, one-stop trip.

• Hispanic and Gen Y shoppers are particularly open to using medical services at retail. As more retailers expand their clinical offerings, there will be more pressure on suppliers to drive sales in the front end … but also opportunities to capture more shoppers with solutions that combine services + products.



Agenda




36


AssortmentPrice/ValueExperience

What Matters to Shoppers in a Grocery Trip?

Source: Kantar Retail ShopperScape®, May 2013 37


Expectations Vary by CohortGen X expects the most; Gen Y emphasizes experience


Ideal Grocery/HH Essential/HBC Shopping Experience(% rating factor as extremely/somewhat important)

*Kantar Retail segments shoppers into “Have Nots” and “Haves” based on income; Have Nots have an annual household income of less than $60k, Haves have an annual household income of $60k+.Note: Yellow highlighting indicates significantly greater vs. all shoppers (95% confidence level)


How Do Mass Retailers Measure Up?Ideal vs. actual shopping experience at Target and Walmart


How do Target and Walmart deliver on their value

propositions?

How do Target and Walmart deliver on their value

propositions?


Target Shoppers Do Indeed “Expect More”Especially place emphasis on experiential factors


Ideal Grocery/HH Essential/HBC Shopping Experience(% rating factor as extremely/somewhat important)

Note: Yellow highlighting indicates significantly greater vs. all shoppers (95% confidence level)


How Well Does Target Meet Guests’ Wants?Best performance on experiential factors


Experience Price/Value Assortment


Focus on Improving Food Assortment

• Focus on improving the health and wellness of its guests• Goal of increasing organic food offerings by 25% by 2017• Spun off Simply Balanced from Archer Farms in July 2013

Target emphasizes meal solutions and better choices

Source: Kantar Retail store visits, research, and analysis 42


Ideal vs. Actual Experience at Target VariesStrengths and weakness differ across segments


Ideal Grocery Shopping Experience vs. the Experience at Target: Key Differences by Shopper Segment*

*Shopper segments listed in the table are those among which the gap between the ideal experience and Target experience is substantially smaller (Target does better) or larger (Target does worse) than all monthly Target shoppers.


Walmart’s Low-Price Message ResonatesEvaluation of experience and assortment less rosy


ExperiencePrice/Value Assortment


Focus on Improving the ExperienceAdding interactions, events

Source: Kantar Retail store visits and analysis 45


Walmart’s Gaps Larger Among Young and Affluent Shoppers


Ideal Grocery Shopping Experience vs. the Experience at Walmart: Key Differences by Shopper Segment*

*Shopper segments listed in the table are those among which the gap between the ideal experience and Walmart experience is substantially smaller (Walmart does better) or larger (Walmart does worse) than all monthly Target shoppers.


Shopper Showdown: Target vs. Walmart


Experience Price/Value Assortment


Implications

48Source: Kantar Retail analysis

• Shoppers “expect more”

• Leverage Target’s equity around experience

• Partner with Target to build equity around price/value and assortment

• Compelling food offer key to relevance of Pfresh stores (and urban stores)…bridge the gap

• Rx Rewards shoppers are more loyal…but also more aware of Target’s shortcomings

• Shoppers know they can “save money” at Walmart

• Partner with Walmart to improve shopping experience where you can

• Shoppers view quality of private label lacking—opportunity for branded manufacturers to fill gap

• Struggling with young and affluent shoppers…how can you help build Walmart’s equity among these key groups?


Questions?




Submit questions on Q&A panel on right side of screen

49


585 S. Front St

Suite 50

Columbus, OH

43215

F +1 617 499 2723

www.KantarRetailiq.com

501 Boylston Street

Suite 6101

Boston, MA

02116

F +1 617 499 2723

585 S. Front St

Suite 50

Columbus, OH

43215

Mary Brett Whitfield

Senior Vice President

Kate Senzamici

Analyst

614 355 4010

617 912 2866

Rachel McGuire

Senior Analyst

614 355 4036

[email protected] [email protected]

[email protected]

presented by: digital fdm shoppers, new healthcare shoppers, and performance gaps at target and...

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