retail disruptors - promotion optimization institute · efmi food retail’s hyper competition in...
TRANSCRIPT
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Retail Disruptors The spectacular rise and
impact of the hard discounters
EFMI Business school
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EFMI FOOD RETAIL’S
HYPER COMPETITION IN THE WORLD OF
GROCERY RETAIL
CONVENTIONAL GROCERY RETAILERS
FOODSERVICE CHANNEL
FOOD SPECIALTY
STORES
ONLINE CHANNEL
HARD DISCOUNT
LOW END (NON-FOOD) RETAIL
THE WALL?
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“Retailing is the fine art
of separating consumers from their money”
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MY VIEW ON RETAIL MARKETS
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MY VIEW ON RETAIL MARKETS
The “wish line”: This is what most people want
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MY VIEW ON RETAIL MARKETS
Organic
Local
Convenience
Fair trade
High quality & good taste
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“Poor people need low prices, but
rich people love them”
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MY VIEW ON RETAIL MARKETS
The “wish to pay” line
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THIS RESULTS IN A ‘BELL-CURVED’ MARKET
Marketsize
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MOST HOUSEHOLDS INCOMES ARE LIMITED – AND NOT EVENLY DISTRIBUTED
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PURCHASING POWER OF MOST HOUSEHOLDS IS MEDIOCRE AND STABALAZING
Development of GDP per capita in EU (purchasing power standard)
Average income standard household in the Netherlands
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SO, MOST MARKETS IN FOOD RETAIL LOOK A BIT LIKE THIS
10-30% 50-75% 5-15%
Marketsize
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THE MID-MARKET STILL HOLDS ‘THE BULK’ OF THE SALES
MID-MARKET
60-80% OF SALES
Marketsize
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When markets mature the
‘Well curve’ becomes more dominant
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THE WELL-CURVE: POLARIZING CUSTOMERS Grow
thpoten
8al
Averagemarketgrowthrate
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POLARIZATION IS ALSO BASED ON CHANGING LABOR MARKET PERSPECTIVE
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THE WELL-CURVE: POLARIZING CUSTOMERS Grow
thpoten
8al
Averagemarketgrowthrate
DISCOUNT DIGITAL
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THE WELL-CURVE: POLARIZING CUSTOMERS Grow
thpoten
8al
Averagemarketgrowthrate
CHEAPER MOREADVANCED
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THE WELL-CURVE: POLARIZING CUSTOMERS Grow
thpoten
8al
Averagemarketgrowthrate
EASYTOSHOPMORE
EXPERIENCE
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“The rise and impact of the hard
discount business model”
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THE SPECTACULAR RISE AND IMPACT OF HARD DISCOUNTERS
• Hard discounters distinguish themselves compared to regular grocery retailers as follows – Very limited assortment – Strong focus on private labels – Small and ‘Spartan-like’ stores – Unbeatable price quality
• In most countries traditional grocery retailers consistently lose sales and margin to hard discounters.
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7.5% 8.5
% 9.1% 9.6
% 9.7
% 9.5
% 9.6
% 8.9
% 8.5
% 8.3
% 7.9
% 7.9
% 7.6
% 7.4
% 7.4
% 7.3
% 7.0
% 6.7
% 6.8
%
1.6% 1.9
% 2.8% 3.5
% 4.1%
3.8%
3.9%
4.0%
4.8%
5.4%
5.6% 6.7
% 7.5% 9.0
% 9.7%
10.0%
10
.3%
10.5%
10
.9%
0%
4%
8%
12%
16%
20%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
The impact of hard discounters
EFMI Business school
HUGE IMPACT IN NETHERLANDS
MARKET SHARE ALDI AND LIDL 2000-2018
Bron: Nielsen, 2018
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OPERATION ANIK0
FUTURE OUTLOOK: HARD DISCOUNTERS WILL BE QUALITY DISCOUNTERS
1 Modern stores
2 Increased choice in vegetables & fruit
3 In-store oven, freshly baked bread
4 Fresh meat in standing shelves
5 Menu suggestions / recipies
6 More ready-to-eat assortment
7 More organic and fair trade
8 Energy saving refrigerators
ANIKO =ALDI NORD INSTORE KONZEPT
All Aldi-Nord stores in Europe will me remodelled
Total remodelling cost: EUR 5,2 billion (EUR 1 mln per store)
ANIKO is based on 8 pillars (see next)
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OPERATION ANIKO: ALL ALDI NORD STORES WILL BE RENEWED
Bron: Inventarisatie EFMI Business School, december 2018
29
3
16
23
14 12
24
16
3
9 10
25
6
0
5
10
15
20
25
30
35 NUMBER OF STORES REMODELLED PER YEAR/MONTH
JAAR 2017
JAN 2018
FEB 2018
MRT 2018
APR 2018
MEI 2018
JUN 2018
JUL 2018
AUG 2018
SEP 2018
OKT 2018
NOV 2018
DEC 2018
ANIKO-RENEWAL IN NL PER JAN 2019
REMODELLED TO ANIKO
(NOT) YET REMODELLED TO ANIKO
193
299
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The impact of hard discounters
EFMI Business school
DISRUPTIVE IMPACT IN THE UK
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The impact of hard discounters
EFMI Business school
DISRUPTIVE IMPACT IN THE UK: 2015-2018
0
5
10
15
20
25
30
35Jan-15 Dec-18
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IS THE US MARKET THE NEXT HARD DISCOUNT BATTLEGROUND?
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The unique hard discount business model
EFMI Business school
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The impact of hard discounters
EFMI Business school
THE IMPACT OF ROTATION
• Harddiscounter:2.000items,Euro180.000perstoreper
week,averagepriceperitem1,80->rota%on50peritemperweek
• Conven8onalretailer:20.000items,Euro240.000perstoreperweek,averagepriceperitem2,40->rota%on5peritemperweek
• Withregardtofreshproducts,whatistheimpactofthedifferenceinrota8onfor:• Freshnessandfoodwaste?• Out-of-stock?• In-storehandlingcosts?• Workingcapital?• Buyingoffice?
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THE HARD DISCOUNTER BUSINESS MODEL
Lowcostdriver1:Efficientretailopera8on
• LowHQcosts• Efficientwarehouseand
transporta8on• Efficientstoreopera8on• Smartpackaging
Driversofcompe88vesustainableadvantages
Lowcostdriver2:Knowledgeableandefficient
procurement
• Na8onalbrandasqualitybenchmark
• Buyinglargevolumesatlowprices
• Deepknowledgeofsupplychain
Lowcostdriver3:Efficientfinancialmanagement
• Lowcapitalintensity• Highsalesperm2• Highrota8on->good
cashposi8on• Solidopera8ngincome,
highROI
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The impact of hard discounters
EFMI Business school
HUGE PRICE ADVANTAGE HARD DISCOUNTERS
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The impact of hard discounters
EFMI Business school
AND QUALITY IS ALSO (VERY) GOOD
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THE HARD DISCOUNTER BUSINESS MODEL
Lowcostdriver1:Efficientretailopera8on
• LowHQcosts• Efficientwarehouseand
transporta8on• Efficientstoreopera8on• Smartpackaging
Driversofcompe88vesustainableadvantages
Mul8plier Largestorenetwork
Lowcostdriver2:Knowledgeableandefficient
procurement
• Na8onalbrandasqualitybenchmark
• Buyinglargevolumesatlowprices
• Deepknowledgeofsupplychain
Lowcostdriver3:Efficientfinancialmanagement
• Lowcapitalintensity• Highsalesperm2• Highrota8on->good
cashposi8on• Solidopera8ngincome,
highROI
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THE HARD DISCOUNTER BUSINESS MODEL
Lowcostdriver1:Efficientretailopera8on
• LowHQcosts• Efficientwarehouseand
transporta8on• Efficientstoreopera8on• Smartpackaging
Driversofcompe88vesustainableadvantages
Customervalueproposi8on
Mul8plier Largestorenetwork
Unbeatableprice-quality
Lowcostdriver2:Knowledgeableandefficient
procurement
• Na8onalbrandasqualitybenchmark
• Buyinglargevolumesatlowprices
• Deepknowledgeofsupplychain
Lowcostdriver3:Efficientfinancialmanagement
• Lowcapitalintensity• Highsalesperm2• Highrota8on->good
cashposi8on• Solidopera8ngincome,
highROI
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The impact of hard discounters
EFMI Business school
THE HARD DISCOUNTER BUSINESS MODEL
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The impact of hard discounters
EFMI Business school
VERY SOLID FINANCIAL PERFORMANCE OF HD’S
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FINANCIAL PERFORMANCE BIEDRONKA
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“How does hard discount growth impact conventional retailers?”
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The impact of hard discounters
EFMI Business school
THE RETAIL SPACE MAP BEFORE HD ENTRANCE
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IMPACT OF HD’ER ENTRENCE ON SHOPPER DECISION MAKING PROCESS
Consumerstendtobecomemorepricefocussedandlessfocussedonaddedvalue
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IMPACT OF HD’ER ENTRENCE ON SHOPPER DECISION MAKING PROCESS
Consumerstendtobecomemorepricefocussedandlessfocussedonaddedvalue
Consumerstendtoevaluateconven8onalretailerslessonpriceandbeferonaddedvalue
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HARD DISCOUNTERS CAUSE A ‘CONTRAST’ EFFECT
Highaddedvalue
HighpriceLowprice
Lowaddedvalue
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HARD DISCOUNTERS CAUSE A ‘CONTRAST’ EFFECT
Highaddedvalue
HighpriceLowprice
Lowaddedvalue
Ini8alsweetspot
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HARD DISCOUNTERS CAUSE A ‘CONTRAST’ EFFECT
Highaddedvalue
HighpriceLowprice
Lowaddedvalue
Conven8onalretailerimage
Ini8alsweetspot
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HARD DISCOUNTERS CAUSE A ‘CONTRAST’ EFFECT
Highaddedvalue
HighpriceLowprice
Lowaddedvalue
HDimage
Conven8onalretailerimage
Ini8alsweetspot
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HARD DISCOUNTERS CAUSE A ‘CONTRAST’ EFFECT
Highaddedvalue
HighpriceLowprice
Lowaddedvalue
Newsweetspot
HDimage
Conven8onalretailerimage
Ini8alsweetspot
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HARD DISCOUNTERS CAUSE A ‘CONTRAST’ EFFECT
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HARD DISCOUNTERS CAUSE A ‘CONTRAST’ EFFECT
Highaddedvalue
HighpriceLowprice
Lowaddedvalue
HDimage
NewCRimage
HDimage
Conven8onalretailerimage
Ini8alsweetspot
Newsweetspot
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HARD DISCOUNTERS CAUSE A ‘CONTRAST’ EFFECT
Highaddedvalue
HighpriceLowprice
Lowaddedvalue
NewCRimage
HDimage
Conven8onalretailerimage
Ini8alsweetspot
Newsweetspot
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The impact of hard discounters
EFMI Business school
HD HAVE CREATED THEIR OWN BLUE OCEAN
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DEVESTATING IMPACT OF HARD DISCOUNT GROWTH IN UK
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HOW CAN CONVENTIONAL RETAILERS COUNTER HARD DISCOUNTERS?
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STRATEGIC OPTIONS CONVENTIONAL RETAILERS
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STRATEGIC OPTIONS CONVENTIONAL RETAILERS
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Is TESCO now adopting a downgrading strategy for its main chain?
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STRATEGIC OPTIONS CONVENTIONAL RETAILERS?
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STRATEGIC OPTIONS CONVENTIONAL RETAILERS
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HOW RETAILERS CAN CAPTURE MORE VALUE FROM NATIONAL BRANDS? BR
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