presented by: rachel mcguire, senior analyst kate senzamici, senior analyst mary brett whitfield,...

Presented by:

Rachel McGuire, Senior AnalystKate Senzamici, Senior AnalystMary Brett Whitfield, Senior Vice President

U.S. Shopper FDM Webinar

February 7, 2014

What to Expect from Shoppers in 2014

© Copyright 2014 Kantar Retail

Copyright © 2014 Kantar Retail. All Rights Reserved.

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Disclaimers

The analyses and conclusions presented in this seminar represent the opinions of Kantar Retail. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion.

This seminar is not endorsed or otherwise supported by the management of any of the companies covered during the course of the workshop or within the following slides.


Agenda: What to Expect from Shoppers in 2014

• Shopping Approaches and Spending Priorities

• Perceptions of Price Leadership

• Loyalty Programs –Update on Safeway’s “just for U” Program

3


Shopping Approaches and Spending Priorities

4


Despite Macro-Economic Uncertainty, Spending Intentions Holding Steady

Source: Kantar Retail ShopperScape®. June 2008–December 2013 5

Spend Much/Somewhat More

Spend about the Same

Spend Much/Somewhat Less

Retail Spending Intentions in Coming Month Compared with the Same Period Last Year (three-month moving average)


Deal Seeking Continue at Top of the List… but perhaps less top of mind as behaviors ingrained in routines

6

Behavior Changes 2013 2014 Type of Behavior

Taking advantage of good sales/deals 49% 47% Deal-SeekingBuying only things I truly need 45% 45% Limiting

Using more coupons 41% 41% Deal-SeekingBuying fewer things 34% 38% Limiting

Doing more price comparison shopping before purchasing 29% 29% Deal-SeekingShopping less often 29% 31% Limiting

Using/keeping items longer before buying replacements 25% 25% LimitingBuying only items needed in the near term 25% 26% Limiting

Shopping more at discount and value retailers 24% 24% Trading-DownPostponing more purchases 19% 21% Limiting

Buying less expensive versions of products 19% 20% LimitingBuying more store brands instead of national or high-end brands 18% 18% Trading-Down

Buying fewer luxury items 18% 19% Trading-DownShopping online for more things 14% 15% Moving Online

Shopping online more often 13% 15% Moving OnlineTrading down to less-expensive brands 12% 12% Trading-Down

Using smart phone to compare prices while in stores 7% 7% Deal-SeekingSwitching some purchasing to "auto-replenishment" programs 1% 1% Moving Online

Source: Kantar Retail ShopperScape®, October 2012 and October 2013

Planned Changes in Shopping Behavior for Year Ahead(among all primary household shoppers)


Have-Not Shoppers More Likely to Plan More Changes

7

Behavior Changes Have Nots Haves Type of Behavior

Taking advantage of good sales/deals 46% 48% Deal-SeekingBuying only things I truly need 48% 39% Limiting

Using more coupons 42% 40% Deal-SeekingBuying fewer things 39% 35% Limiting

Doing more price comparison shopping before purchasing 30% 26% Deal-SeekingShopping less often 34% 27% Limiting

Using/keeping items longer before buying replacements 27% 24% LimitingBuying only items needed in the near term 29% 23% Limiting

Shopping more at discount and value retailers 27% 19% Trading-DownPostponing more purchases 23% 19% Limiting

Buying less expensive versions of products 25% 13% LimitingBuying more store brands instead of national or high-end brands 21% 13% Trading-Down

Buying fewer luxury items 19% 18% Trading-DownShopping online for more things 14% 16% Moving Online

Shopping online more often 14% 17% Moving OnlineTrading down to less-expensive brands 14% 8% Trading-Down

Using smart phone to compare prices while in stores 6% 10% Deal-SeekingSwitching some purchasing to "auto-replenishment" programs 1% 1% Moving Online

Planned Changes in Shopping Behavior for Year Ahead (2014)(among all primary household shoppers)

Source: Kantar Retail ShopperScape®, October 2013

Note: Have-Not shoppers have annual household income less than $60K’; Have shoppers have annual household income of $60K+


Planned Changes in Shopping Behavior: 2014 vs. 2013(among all primary household shoppers)

2013 2014

Growing participation vs. last year:• Limiting Behaviors

– Buying fewer things 34% 38%

– Shopping less often 29% 31%

– Postponing more purchases 19% 21%

Shoppers Signaling More “Limiting” in 2014

8

Plus online shopping more likely to be in the mix

Source: Kantar Retail ShopperScape®, October 2012 and October 2013

Note: Yellow shading indicates a significant difference between 2013 and 2014 (90% confidence level)


Store Set Contracts in 2013

Source: Kantar Retail ShopperScape®, January 2007–October 2013 9

12.412.4

11.111.1 11.211.211.111.110.710.7

11.211.2

12.412.4

*Inclusive of visits to stores and websites; averages are for Q1–Q3 of each year.

Average Number of Retailers Shopped in Past Four Weeks*(among all primary household shoppers)

Average Number of Retailers Shopped in Past Four Weeks*(among all primary household shoppers)


• Data points indicate that “Limiting” is on the agenda

–Fewer retailers shopped for back-to-school

–Fewer retailers shopped for holiday gift giving

–Lower rate of category purchase incidence across myriad discretionary and non-discretionary categories in Q4

Evidence that Shoppers Drawing Boundaries Mounts

10Source: Kantar Retail ShopperScape®, December 2010–2013


Categories that Maintained Q4 Purchaser Base

11

• TVs

• Video game system

• Personal computers

• Tablet computers

• Printers

• Small and major appliances

• Craft/hobby/arts supplies

• Sporting goods

• Key home improvement categories

• Color cosmetics

• Pet food and supplies

• Beer and wine

• Vitamins

Source: Kantar Retail ShopperScape®, October–December 2013

Categories with Flat Category Purchaser Incidence Rate Q4 2013 vs. Q4 2012(among 80+ categories tracked )

Categories with Flat Category Purchaser Incidence Rate Q4 2013 vs. Q4 2012(among 80+ categories tracked )

No categories had significantly higher purchasing rates …


Staying Healthy and Organized Are Top Spending Priorities

12

24%10%9%8%

7%5%

10%5%5%3%3%2%

2%3%2%2%

1%

% selecting as

top priority


Spending Priorities(% of shoppers selecting products as one of top five near-term spending priorities)

Spending Priorities(% of shoppers selecting products as one of top five near-term spending priorities)


Varying Priorities by Generation Help Further Refine Opportunities

13Source: Kantar Retail ShopperScape®, October 2013

Top 5 Spending Priorities by Generation(as ranked by percentage of shoppers selecting products as one of top five near-term spending priorities)

Top 5 Spending Priorities by Generation(as ranked by percentage of shoppers selecting products as one of top five near-term spending priorities)


• Haves and Have Nots have same top spending priorities …

• … but a few differences farther down the list

Minimal Differences by Income

14

Opportunities across the “good-better-best” spectrum

Staying healthy

Staying organized


Key Differences in Spending Priorities: Haves vs. Have Nots


Amazon Becomes the Top Holiday DestinationLeapfrogs Target in 2011, Walmart in 2013

Source: Kantar Retail ShopperScape®, December 2011, December 2012 and December 2013 15

Note; Arrows indicate significant decline vs, holiday 2012 (95% confidence level)


Holiday Shopping Shifts OnlineProving ground for building online shopping routines

Source: Kantar Retail ShopperScape®, December 2013 16

Budget shifted more toward online/Cyber Week than Black Friday

Budget shifted more toward online/Cyber Week than Black Friday

Holidays set stage for year-round online

shopping

Holidays set stage for year-round online

shopping


Online Disrupts Shopping Routines

Source: Kantar Retail ShopperScape®, October 2013 17

How Approach to Shopping Has Changed in Past YearPercent of Shoppers Indicating Statement Describes “Quite Well” or “Somewhat”

How Approach to Shopping Has Changed in Past YearPercent of Shoppers Indicating Statement Describes “Quite Well” or “Somewhat”




Perceptions of Price Leadership

18


Price Remains Paramount in the Value EquationWhich retailers are best positioned to win with price-sensitive shoppers looking to limit spending in 2014?

Source: Kantar Retail ShopperScape®, January 2013 19


Walmart’s EDLP Message Reflected in Shoppers’ Price Perceptions

Source: Kantar Retail ShopperScape®, November 2013 20

But how do “core” shoppers

view these retailers?

But how do “core” shoppers

view these retailers?


Walmart Perceived Leader for Shelf-Stable GroceryHEB slips vs. last year, while ALDI gains

Source: Kantar Retail ShopperScape®, November 2011, November 2012, and November 2013 21


HEB Dominates in Fresh GrocerySupermarkets in general the perceived price leaders



Walmart Leads in Household EssentialsMany supermarkets see slight gains in price perception



Walmart’s Lead in HBC Price Perception SlipsWalgreens and Publix make gains



Summary of Price Leadership Winners and Losers

Source: Kantar Retail ShopperScape®, November 2011, 2012, and 2013; Kantar Retail analysis 25

Trending Up Trending Down

Non-perishable grocery• Publix• Ahold banners• Safeway banners

• Walmart• Sam’s Club

Fresh grocery

• HEB• Kroger banners• Publix• Safeway banners

• ALDI• Sam’s Club

HH cleaning and paper products

• Kroger banners• Safeway banners• Publix

• Sam’s Club

HBC• Walgreens• Publix

• Walmart• Family Dollar

Retailers Trending Up/Down In Price Leadership Perception Among Monthly Shoppers


Two Retailers Improved Across All Categories from 2012 to 2013

26Source: Kantar Retail analysis and ShopperScape®, November 2012 and November 2013

Price Leadership Perception Among Monthly Shoppers of Retailers


Non-Perishable

GroceryFresh

Grocery

HH Cleaning

and Paper HBC

Walmart/Walmart Supercenter Have Nots1 Have Nots1 BoomersTarget/SuperTarget Gen X Gen Y Gen Y Gen YWarehouse clubs Seniors Seniors Seniors SeniorsDrug storesDollar stores Have Nots1 Have Nots1 Have Nots1

Supermarkets Haves1 Haves1

Price Leadership Perceptions Differ by Key Demographic Groups

27

Price Leadership Perception, by Generation and Income(demographic groups listed significantly more likely vs. all shoppers to name

retailer/channel as price leader)

Source: Kantar Retail ShopperScape®, November 2013

• Target more likely to be perceived price leader for non-perishable grocery among Gen X, but all other categories among Gen Y

• Seniors more likely to view clubs as price leader across all categories

• Walmart’s price leadership perception strongest among lower-income shoppers and Boomers—historically, Walmart’s core shopper base

1 “Have Nots” are those with an annual household income of <$60k; “Haves” are those with an annual household income of $60k+


How Well Do Shoppers’ Perceptions Match Reality?

28

Total Basket Price

$28.70

$34.05

$37.89

$42.49

$28.82$30.81

Source: Kantar Retail analysis

Note: Data based on pricing study done by Kantar Retail. Six retailers located within a five-mile radius of each other in the Northeast U.S. were selected. For each retailer, Kantar Retail assessed the lowest price point available to the shopper in each of 21 categories (trial sizes were excluded) so that she could minimally meet her purchase requirement. Pricing study performed in September 2013.


How Well Do Shoppers’ Perceptions Match Reality?

29

Pretty well, with a few exceptions

Note: Actual price of total basket based on pricing study done by Kantar Retail. For each retailer, Kantar Retail assessed the lowest price point available to the shopper in each of 21 categories (trial sizes were excluded) so that she could minimally meet her purchase requirement. Pricing study performed in September 2013.

Source: Kantar Retail analysis and ShopperScape®, November 2013


Walmart Goes Head-to-Head on Price

30


Shopper Showdown: Walmart vs. Key Competitors

31

Price Leadership Perception Among Monthly Shoppers of Retailers(among monthly shoppers of both Walmart AND competitor, % who say Walmart/competitor is the

price leader)



Changing Price Leadership Perceptions

• Though we’ve seen a shift toward other aspects of “value” in recent years, price is still the paramount consideration

–As more shoppers look to maintain spending levels and adopt some limiting behaviors in 2014, price is likely to become more important

• Walmart has the strongest price leadership perception overall, but there are some rocky spots

–Leadership position slipping in non-perishable grocery and HBC

–Loses (often handily) to key competitors in fresh grocery

–Price leadership position strongest among “core” Walmart demographic groups, but growth will depend on winning with other shoppers (young, affluent)

• Internalization of deal-seeking mentality reflected in price leadership perception gains for many supermarkets

32

Key Takeaways


A Look at Loyalty Programs

33


Spending Less Most Important to ShoppersLoyalty cardholders more concerned with value

34Source: Kantar Retail ShopperScape®, November 2013

Spending as little as possible top factor when shopping

~75% of loyalty card and non-loyalty card shoppers ranked it among top four

Arrows in chart indicate significant difference between column percentages at a 90% confidence level.

Convenience vs. ValueConvenience vs. Value


Loyalty Card Participation Mostly Steady Across Retailers: More Have Cards vs. 2012

35

Balance Rewards gaining traction since

September 2012 rollout

Balance Rewards gaining traction since

September 2012 rollout

Increase in participation vs.

2012

Increase in participation vs.

2012

Source: Kantar Retail ShopperScape®, November 2012 & November 2013

*Read as: 49% of shoppers surveyed in November 2013 reported having a CVS ExtraCare card.Arrows indicate significant difference vs. 2012 (90% confidence level)¹Dillons, Fry’s, King Soopers, Kroger, QFC, Ralphs, Smith’s; ²Dominicks, Randalls, Safeway, Tom Thumb, Vons;³Giant Foods, Stop & Shop; ⁴Acme, Albertsons, Jewel, Shaw’s/Star Market


CVS ExtraCare Leads in Loyalty15 year history and penetration give CVS the advantage

Source: Kantar retail analysis & store visits, company reports 36

• 275 million unique cards, 70 million active users – Well established among CVS shoppers

• Well developed & need-specific programs

• Leveraging insights to hone assortments and drive shoppers to new categories across the box

Partnering with individual suppliers

Partnering with individual suppliers

Encouraging collaboration b/t

vendors & ExtraCare for

solutions

Encouraging collaboration b/t

vendors & ExtraCare for

solutions


• Finding that though membership is high, actual usage is low

– Shoppers find the program confusing

– Not used to the points system

• Now Walgreens is ready to shift the focus from registering to rewarding members

– Working on educating the shopper, making it easy for them to optimize the system

Source: ECRM MarketGate, Kantar Retail analysis

One Year Later, Where DoesBalance Rewards Stand?

Making the reward clear for shoppers,

putting it into a measure they understand

Making the reward clear for shoppers,

putting it into a measure they understand


Kroger Continues to “Capture” Most of Own Shoppers with Loyalty Card

Source: Kantar Retail ShopperScape®, November 2012 & 2013 38

*Read as: 94% of Kroger shoppers have a Kroger loyalty card.Percentage point figures indicate ppt difference from November 2012.

Balance Rewards gains traction, while SVU

Rewards loses shoppers due to store closures


Supermarket Loyalty Cards Still Generate Higher Satisfaction vs. Drug

39Source: Kantar Retail ShopperScape®, November 2012 & 2013

Though CVS, Walgreens are improving

Arrows indicate significant difference vs. 2012 (90% confidence level)¹Dillons, Fry’s, King Soopers, Kroger, QFC, Ralphs, Smith’s; ²Dominicks, Randalls, Safeway, Tom Thumb, Vons;³Giant Foods, Stop & Shop; ⁴Acme, Albertsons, Jewel, Shaw’s/Star Market


% Loyalty Cardholders Who Spend the Most on Merchandise Group at Retailer

2012 2013 ppt differenceKroger (all banners)

46% 44%** -2.1Giant Eagle Advantage Card*

46% 43% -3.1Ahold (all banners)

30% 35% 5.0Safeway (all banners)

39% 35% -4.4Winn Dixie Customer Reward Card

30% 31% 1.1Food Lion MVP Card

31% 29% -1.9Supervalu (all banners)

25% 24% -1.3CVS ExtraCare card

19% 19% 0.5Walgreens Balance Rewards

17% 14% -2.9Rite Aid Wellness+

11% 10% -0.8

But Do Loyalty Cards Really Generate Loyalty?Capture rates mostly down from 2012


Fo

od

/ G

roc

eri

es

HB

C

*Low sample size (n = 84)**Read as: 44% of shoppers who have a Kroger loyalty card spend the most on food/groceries at Kroger.


Discounts Most Important to ShoppersWhile other factors carry pretty equal weight

41

39% of Safeway shoppers rate

personalized pricing as a very important benefit

39% of Safeway shoppers rate

personalized pricing as a very important benefit



Case Study: Safeway’s “just for U”

Kantar Retail Analysis 42

Digital coupons, personalized shopping lists, weekly Club Card SpecialsDigital coupons, personalized shopping lists, weekly Club Card Specials

Personalized Deals

Sale items chosen for shoppers based on basket history—shoppers get their OWN

price on items they buy often

Personalized Deals

Sale items chosen for shoppers based on basket history—shoppers get their OWN

price on items they buy often

WHAT: An enhanced loyalty program that provides a more digital and tailored shopping experience by organizing and personalizing the shopping experience according to what is most important to each shopper


JFU Demographics Steady from 2012With some slight increases


Safeway claims more than 6 million registered just for U users (Q2 2013 conf. call)Safeway claims more than 6 million registered just for U users (Q2 2013 conf. call)

Arrow indicates significant difference vs. previous year (90% confidence level)*The ShopperScape® survey is conducted online and in English only; Hispanics in this sample not representative of the full U.S. Hispanic population.


Safeway’s Personalized Pricing Boosts Price Perception

44

Important pillar of “just for U” program

Source: Kantar Retail ShopperScape®, November 2012 & 2013

+2 ppt +3 ppt +9 ppt +3 ppt +2 ppt +3 ppt +9 ppt +3 ppt

Price perception among JFU members has increased across categories from 2012

Arrows indicate significant difference vs. all Safeway Club Card members (90% confidence level)*Includes Dominick’s, Randalls, Safeway, Tom Thumb, Vons


Program Resonates with Shoppers’ ValuesDeals, discounts, and ease

Source: Kantar Retail ShopperScape®, November 2013 45

Spending as little money as possible

Spending as little money as possible

Getting a “good deal”Getting a “good deal”

Stress-free shopping experience

Stress-free shopping experience

All JFU members

Have-nots (< $60,000)

Haves ($60,000+)

Sample size 296 149 147

Variety of coupons 77% 85% 70%

Personalized deals offer good prices 76% 80% 72%

Ease of adding coupons to my club card 75% 83% 68%

Personalized deals are relevant 73% 81% 64%

Ease of accessing account information 73% 82% 63%

Ability of JFU site to help plan grocery trips 65% 76% 53%

Satisfaction higher among Have-Not just for U members

Shading indicates significantly greater percentage vs. all just for U members; border indicates significantly lower percentage (90% confidence level)


Are just for U Members More Loyal?Fewer shoppers report shopping, spending more since joining just for U

46

ShoppingShopping SpendingSpending


“…mobile users [are] using the site more frequently, spending more money than those who are accessing the technology on a desktop

computer.”-Safeway Q3 2013 conf. call

“…mobile users [are] using the site more frequently, spending more money than those who are accessing the technology on a desktop

computer.”-Safeway Q3 2013 conf. call


just for U App Usage On the RiseEspecially among Have-Not shoppers

47

Have Nots (<$60,000)

Haves ($60,000+)

2012 2013 2012 2013

Sample size 147 149 178 147

just for U Web site on a computer 89% 80% 84% 81%

just for U smartphone app 10% 22% 27% 32%

just for U iPad app 1% 5% 5% 6%

None of these 8% 10% 6% 7%

Which of the following have you used to access or manage your “just for U” account?


Shading indicates significant difference year-to-year (corresponding shopper segments); 90% confidence level


Satisfaction Doesn’t Translate Into Trip Driverjust for U more of a convenient bonus—especially among higher-income members

48Source: Kantar Retail ShopperScape®, November 2013

Arrows indicate significant difference compared with all just for U members (90% confidence level)


Takeaways/Implications

• Shoppers’ needs are pretty simple: They want to spend as little as possible, get a good deal, and have a frustration-free shopping experience. Communicating with retailers the importance of keeping it simple will resonate most with shoppers.

• Personalized pricing is a best in class example of keeping it simple. Shoppers have almost unlimited options today—help shoppers simplify shopping routines by customizing their shopping experience for them in the form of relevant deals.

• Even with the success of personalized pricing, JFU is still not a major trip driver for Safeway.

49

• High participation and satisfaction with rewards programs still doesn’t guarantee true loyalty


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Questions?

• Shopping Approaches and Spending Priorities

• Perceptions of Price Leadership

• Loyalty Programs –Update on Safeway’s “just for U” Program

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

51


Contact:

Rachel McGuireSenior [email protected]

T:+1 614 355 4036www.kantarretailiQ.com

Kate SenzamiciSenior [email protected]

T:+ 1 617 912 2886www.kantarretailiQ.com

Mary Brett WhitfieldSenior Vice [email protected]

T:+1 614 355 4010www.kantarretailiQ.com

presented by: rachel mcguire, senior analyst kate senzamici, senior analyst mary brett whitfield,...

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