presented by: “push-me/pull-you” vadim khetsuriani retail insights director june2013 … for...

Presented by:

“PUSH-ME/PULL-YOU”

Vadim KhetsurianiRetail Insights Director

June 2013

… FOR CLEVER RETAIL MODELS IN A CHALLENGING AND CHANGING WORLD

© Copyright 2013 Kantar Retail

Agenda

– Clever retailers

– The future of global retail

– The growth forecast

2


Retailers are facing a massive period of uncertainty & shopper volatility, forcing them to re-evaluate:

Convenience (Proximity)

Loyalty

Experience

Value

Execution

ROI

C.L.E.V.E.R – Retailers need to address each component

4Source: Kantar Retail


Convenience is a “Mix” of Speed & Ease:The Inconvenient Truth: The Middle Is No-Mans Land

5

Speed-Based Convenience

Quick In /Out One-Stop Shop

Getting To The Store

Easy Access Shopping Destination

Merchandise Mix At The ShelfImpulse Stock Up

Product UsageImmediate Planned

All four factors are present at all times – different retailers balance them differently; the mix defines the store model

Ease-Based Convenience

Walking In The Store

“An Inconvenient Truth”

Source: Kantar Retail analysis


Evolution of convenience retailing - Typical strategies adopted…

Source: Kantar Retail 6

STAGE 1 Race for space

STAGE 3 Race for bigger spend, localization and optimization

STAGE 2 Race for footfalls (traffic)


Race for space…Easy Access

Auchan’s “A 2 Pas”, France

Sainsbury “Fresh Kitchen”, UK

Carrefour “City Cafe”, France

Casino “Chez Jean”, France

ICA “To Go”, Sweden

AH “To Go”

Metro “Odido”,Poland

Source: Kantar Retail analysis

Smaller lower volume distribution points will represent high growth

7


Race for footfalls…Easy Access + One Stop Shop


200 Coop stores in the UK have Amazon lockers

Fnac has a large store network in France, which is being used to collect products ordered online.


Race for footfalls in Russia – where will some categories shift from traditional trade?

9


Like for like store sales growth in Russia is an opportunity for modern trade

10

Источник: Кантар аналитика, отчеты сетей


Race for bigger spend, localization and optimization…


Provision of ancillary services in c-stores across Asia

Charging a premium for convenience where opportunity exists in Europe

Localised offers in 7-11 Japan

SKU optimisation


Bigger spend, localization and optimization in Russia – options to consider

Source: Kantar Retail analysis 12

Categories and brands that build basketCross category merchandisingCapture loyalty of high spending shoppers




Loyalty

Experience

Value

Execution

ROI




According to Milward Brown Brandz Study in Moscow Only Two Retailers Had Increase in % of Loyal Shoppers

2012 2005

Источник: Милворд Браун Брэндз


Loyalty is not a Strategy but an Outcome of Specific Actions

15

Cards work when used to its competitive maximum – data analysis is key

Brands that enjoy high loyalty from their shoppers should be used to its

competitive advantage

As Russian shoppers become more loyal to retail brands, private label will be an effective tool to sustain loyalty






Loyalty

Experience

Value

Execution

ROI


Value is not the same as low prices…

Value = Price + Quality + Service


EDLP, promo, fixed price, private label

Private label, brands, solutions, experience

Assortment, customer service, availability, convenience

“Price is what you pay. Value is what you get”

Warren Buffet


Redefining Value by offering solutions…BUT

Kantar Retail analysis 18

Sainsbury’s Aldi


Colruyt: Our customers keep us sharp!

Source: Kantar Research 19

Customer said:

“You say that you lower your prices immediately when a lower price is reported. I have called you twenty minutes ago and I am in your store now, but the price is still the same”.

1.Before, we adapted our prices only the day after, but our ad said “immediately”.

2.Since then, we have installed printers in every store, so we can adapt our prices immediately all over the country.

Jean-Pierre Roelands, commercial director Colruyt


Price competitiveness is also a engagement tactic…


Вы не найдете Франсин бренд на наших полках, потому что мы не принимаем чрезмерного повышения цен на них

• The traditional trade shopper is usually very price sensitive on the most frequently purchased items

Pricing statements here critical

Price level may not be the key beyond this…shoppers respond to

Modern trade retailer – the goal of this engagement isn’t excitement, but trust

China - excitement

France - trust






Loyalty

Experience

Value

Execution

ROI


How retailers work – What will be the focus for the next two years?


ROCE/RONA(Return on Capital

Employed)

Return(Operating Income)

Asset Investment

Sales

Gross Margin

Expenses

X

-

Net Inventory

Fixed Assets

+

Auchan R

U

Metro

CC R

ULenta

Oke

y

Monetk

a

Magnit

X5 Gro

upDixy

Real Hyp

. RU

Walm

art

Tesco

Carrefo

ur

Metro

G

Auchan G

220%

58%31% 27% 26% 16% 10% 8% 6% 18% 14% 14% 11% 8%

Weighted average ROCE over 3 years

Presented by:

23

THE FUTURE OF RETAIL…NOT AS GOOD AS IT USED TO BE?

Retailers will be brands?

Smart Self-Cleaning Fridge Orders Food & Suggests Recipes?


Tried to think of things that will be true almost everywhere…


Connected

PolarizedVolatile

Market Evolution Dynamics2018

All-in-one

PersonalDynamic

Portable

TargetedFlexible

20142012

VOLATILE Planning processes, people, and information systems that allow resources to flow more naturally to the work

POLARIZED Marketing and shopper connection becoming increasingly biased towards strategies that truly reflect the specific behaviors and attitudes of individuals

CONNECTED Mobile is phase 1 of a new information and communication paradigm – by 2018 touch point should be more “media-neutral” and truly inter-connected


Managing volatility… flexibility with purpose

Kantar Retail’s definition “flexibility with purpose”

Our mantra: “Purpose without flexibility is irrelevant. Flexibility without purpose is chaos”

Paul Polman, Unilever Q2 2012 Earnings Call: “Agility is key, as it is more and more difficult to predict what will

happen next in an increasingly volatile external environment. It allows us to respond. It allows us to

allocate resources quickly where they are most needed or where they can add most value. As Pier Luigi, our

head of our product supply, always says, "Speed is the currency.“”

25


Managing polarization… of everything…

Geography: Countries and

Cities…

Income: Haves vs. Have Nots

Ethnicity: Non-majority

populations

Generations: Diversity & Technology

Retail growth: Channels & Categories


USAChin

a

Japa

n

United

King

dom

Russia

Franc

e

Germ

any

Mex

icoBra

zil

Poland

Canad

a

Austra

lia

South

Kor

ea

Thaila

ndSpa

in

Turke

yIta

ly

Taiwan

Indo

nesia

Ukrain

eChil

e

Nethe

rland

s

Sweden

India

Colom

bia

Philipp

ines

othe

r 12

80%

5%

10%

15%

20%

25%

30%

35%

Share of real growth 2009-12 Share of real growth 2013-16

MASTER THE GREAT BIG ‘KNOWS’ OF MODERN TRADE GROWTH

BEYOND THE USA AND CHINA, GROWTH IS SPREAD ACROSS VERY DIFFERENT MARKETS

Growth is scattered amongst markets that require creative clustering to tackle


26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 $-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

USA

United Kingdom

Turkey

South Korea

South Africa

Saudi Arabia

Russia

Mexico

Japan

Italy

Indonesia

India

Germany

France

European Union

China (mainland)

Canada

Brazil

Australia

Argentina

Country Wealth Versus Income Equality in the G20 Nations

Most Recently Published Gini Coefficient

GD

P p

er C

apit

a, 2

010,

$ U

SD

Income polarization in fast growth markets is just one example…

27

High Income Countries

Low Income Countries

UnequalEqual

Distribution of Wealth Amongst All Income Classes

*Saudi Arabia information not published recently

Sources: IMF, World Bank, UNDP, Eurostat, OECD

Understanding price point, value, shopping dynamics critical


Market differences can be described by STAGES 1-5, BUT…


1 Exploration

2 Concentration

3 Penetration

4 Maturation

5 Post-Modern

Chain retail < 20% total market shareTop 5 share< 30% Chain retail Supermarkets and C&C drive modern trade

Chain retail < 30% total market share Top 5 share < 40% Chain retail Minimarkets, soft discounters, hypermarkets drive modern trade

Chain retail <40% total market shareTop 5 share < 50% Chain retail Multiformat is critical for growthNew formats emerge

Chain retail <50% total market shareTop 5 share < 60% Chain retail Growth comes from taking shoppers from other retailersNew formats are key for growth

Chain retail >50% total market shareTop 5 share > 60% Chain retail Growth is limited to personalized approach

Kantar Retail Insights Market Evolution Model™

Источник: Кантар Ритейл Аналитика


We will experience generational “skipping” of market evolution stages in many places


Median Age

% of population under 14

10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%0

5

10

15

20

25

30

35

40

45

50

Japan, Germany, Italy

China

Russia, South Korea, Spain,

Ukraine

France, UK

Indonesia, Brazil

USAThailand

India

EthiopiaPakistan

Congo

SudanNigeria

Mexico, Vietnam, Turkey, Myanmar, Colombia (in decreasing order of bubble size)

EgyptBangladesh, PhilippinesIran

South Africa

Countries are the top 30 population countries = 80% world population

Bubble size = # of people under 14= 20MM people


Fewer shoppers will enter stores – Need understanding of relationship between mobile, commerce and logistics

Source: Kantar Retail store visits 30


In the Future…. Retailers will be brands and brands will be retailers?

In retailers quest for loyalty it is much more than just private label


Services in many markets growing faster than goods

BACK TO THE FUTURE: KANTAR RETAIL RETAILER GROWTH FORECAST


Based on 1665 retailers forecasted by Kantar by banner, format, channel, market…

Source: Kantar Retail database

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -

1,000

2,000

3,000

4,000

5,000

6,000

Supermarket 5% Category Specialist 5% Hyper/Supercentre 4%

Discounter 7% Convenience 6% Drug 6%

Cash and Carry 7% Department 3% Non Store Retail 14%

CAGR 2013-2016 (organic forecast by retailer)

SALES REVENUES (billions EUR)

33


Growth outside of US and China…

Source: Kantar retail database 34

0% 5% 10% 15% 20% 25%0%

5%

10%

15%

20%

25%

Amazon.comWal-MartMagnitTesco

7-11Schwarz G

Casino

CostcoX5 Retail Group

Aeon

Next 50Others

CAGR 2013-16

Sh

are

of

tota

l m

od

ern

gro

wth

201

3-16

Top 10 share of growth line

Size of the bubble

=EUR 20 bill


Modern Trade in Russia…

Source: Kantar Retail database 35

2008 2012 2016 14

38 59 12

23

34

10

19

38

13

21

41

3

10

34

4

7

9

Sales in EUR BillDiscounter 12% Supermarket 10%Hypermarket 19% Category specialist 18%Non-store 35% C&C 6%

CAGR 2013-16


THE NEW WORLD:

• Convenience = Satisfaction Per Second– Assortment must be optimized for trip

type/neighborhood• Loyalty = Managing “Convenience Leakage”– Understanding shopper missions key to overcoming

proximity– Broader relationships with shoppers key

• Experience = Delight Per Euro– Fun stores go broke – stores that can close will win

• Value = The Changing Language of Price• Execution & ROI/ROCE/RONA – building processes and making decisions that can support doing more than one thing well…

Being CLEVER

Source: Kantar Retail36 36


THANK YOU FOR LISTENING!

Vadim [email protected]

37

Вадим Хецуриани, Кантар Ритейл В течении последних 10 лет Вадим проводит консультационные проекты по разработке стратегии продаж производителей, мерчандайзинга и стратегического планирования для крупных международных сетей как Ашан, Карфор, Лидл, Метро, Х5, Магнит и БИМ. Опыт работы Вадима включает 5 лет работы на американском рынке с поставщиками Вол-Март, два года работы в Великобритании с поставщиками Теско и многочисленные проекты в Польше, России, Ближнем Востоке и Азии связанные с деятельностью Карфор, Метро, 7-11, Кауфланд и др.

Vadim Khetsuriani, Kantar RetailVadim leads consulting practice in CEE as a retail insights and subject matter expert on FMCG selling and merchandising and commercial strategy planning with International retailers such as Auchan, Carrefour, Lidl, Metro C&C in the region as well as the local key accounts of X5 Retail Group, Magnit and BIM. With 10 years’ experience in Central Eastern Europe as well as in the Middle East and South East Asia Vadim has led many international projects on various aspects of selling to large multinational chains such as Carrefour, 7-11, Metro and Tesco and German discounters. Prior to that Vadim was responsible for Kantar Retail (MVI) retailer financial analysis used for international supplier account planning based in Boston, USA.

mailto:[email protected]

presented by: “push-me/pull-you” vadim khetsuriani retail insights director june2013 … for...

Documents

kantar retail slide

kantar retail convenience

kantar retail race

kantar retail retailers

kantar retail loyalty

kantar retail analysis

kantar retail like

clever retail models