retail usa whats in store 2016 white paper mar 2012

7/31/2019 Retail USA Whats in Store 2016 White Paper Mar 2012

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2/92 Copyright 2012 The Nielsen Company.

OverviewWhats in store, in-store for U.S. retail in 2016? By integrating research across its proprietaryproducts, Nielsen developed a forward-looking view of the retail environment encompassingtrends in channels and formats, media and communication methods, as well as the impact ofconsumer trends such as an increasingly aging and ethnic population, the changing definitionof convenience, and the continuing focus on health and wellness.

Retail USA: Whats In Store for 2016? Todd Hale, Senior Vice President,Consumer & Shopper Insights, Nielsen

MethodologyForecasts are based on historic annual dollar sales trends in theNielsen Trade Dimensions database. Estimates include selected

relevant factors such as channel square footage and populationgrowth trends. Share calculations use a bottom-up summationof channel forecasts. Brick-and-mortar channel numbers do notaccount for potential shifts in consumer channel preferencedue to future changes in channel or retailer price, promotionor product assortment strategies. The e-commerce forecastassumes a moderate growth scenario.

HighlightsTraditional mass merchants and supermarkets have yielded shareto value channels (club, dollar, and supercenter) and drug stores,

prompting a series of changes running the gamut from formatblurring to new marketing outreach techniques to shopper-tainment.

Go micro or macro. Store footprints either get supersized forone-stop-shop convenience or downsized into smaller storesfor quick grab-and-go trips.

Thats shopper-tainment! For people who view shopping asentertainment that engages all the senses, lifestyle outlets blurthe line of demarcation between traditional formats, mergingrestaurants with food markets, serving up food and winetastings, providing live music and movies, and creating placesfor friends and co-workers to gather and socialize.

Technology brings consumers into the shopping experience viaoptions such as touch screen ordering, QR code advertising,mobile coupons and shopping lists.

Whats in a [brand] name? Enough to see store brandsmushroom to include super premium offerings joined by anincreasing number of restaurant and celebrity-chef brands,while a few consumer packaged goods brands transitioned

onto restaurant menus.

Expect the Big 4 technology companies [Amazon, Apple,Facebook, Google] to establish beachheads outside the techworld, challenging conventional players to re-think theirbusiness models and forge new alliances or chance seeingthemselves become less relevant.

Deep discounters continue to keep the cap on operating costsin order to maintain their price edge, but low prices alone havenot been enough to guarantee sales success.


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DiscussionRetailers will be challenged as never before in the next five yearsto differentiate from an ever-expanding competitive set thatbrings novel ideas and fresh perspective to the marketplace.Using historical trends in retail channel sales and store counts,along with a select number of macroeconomic variables, Nielsen

predicts above average compounded annual dollar sales growth(CAGR) for the e-commerce, club, dollar, pet store, supercenterand drug channels ranging from 8.5 to 2.7 percent.

It should come as no surprise that e-commerce tops the listof growth channels. During the 2011 holiday season, retailersacross different channels touted free shipping and big discounts,attracting consumers eager to save time and gas money byshopping at their fixed and mobile keyboards.

Responding to sales gains made by online competitors, brick-and-mortar retailers are evolving their business models to add

more choices for online and offline ordering as well as deliveryand pick-up options. Black Monday (the big day for online holidayshopping) appears to be garnering media coverage equal to thehistorical coverage of Black Friday (the day after Thanksgiving).


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Singular SolutionsAnother retail option gaining momentum was solutionselling across departments. Retailers opted for designatedstores-within-a store, pulling together related items that fulfilla consumer need into a discrete space such as a cosmeticsdepartment complete with expert consultant, occasion-based

home meal solution centers or dedicated pet care areas.Store locations now take an unconventional bent as well to reachbusy or isolated shoppers. Procter & Gamble set up virtual storesin four high-traffic subway stations in Prague, while Nestle tooka different tack, setting sail via a floating supermarket on theAmazon River designed to reach 800,000 consumers in just threeweeks.

Food as TheatreShopper-tainment, the idea of delivering a unique in-storeshopper experience, is catching hold in exciting ways thatdifferentiate retail formats. Proven techniques for attractingshoppers include product sampling, live musical performancesand how-to stations demonstrating everything from juicing to

preparing sushi.Loblaws at Maple Leaf Gardensan 85,000 square foot marketwith self-serve seafood, a grand wall of cheese and loads ofprepared food stationsimmerses shoppers in the sights, soundsand scents of what the company calls the theatre of food.H-E-B took the concept literally, cordoning off part of a Houstonstores parking lot to create an outdoor events plaza for weekendconcerts, movies and artisan markets, with a food truck ready toserve gourmet food to the assembled crowds.


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The Coca-Cola Freestyle vending machine amuses consumers byallowing them to blend their own beverage, selecting from morethan 100 different brands of soft drinks, fruit flavored beverages,sparkling beverages and waters, many of which have never beenavailable before in the U.S. These vending machines do more thanallow consumers to customize beverages to personal tastes; theyalso can record and report back on all the flavor combinations, a

boon to brand managers seeking innovation.

Format BlurringThe trickle down from channel blurring brings us format blurring,where grocers and restaurants invade each others kitchens,sometimes competing and sometimes collaborating to fulfillunmet shopper needs. Multi-station prepared food offerings nowpopular in a number of grocers compete directly with carry-outand home delivery restaurants. But retailers like Target, Meijerand Walmart also chose the cooperative route, striking dealswith Starbucks, Quiznos and Subway, respectively, to staff in-

store restaurants.Restaurateurs and television chefs crossed over into the worldof consumer packaged goods, lending their names to a widerange of products including White Castle sliders, Boston Marketentrees, Dunkin Donuts coffee, Emeril LaGasse spices, MarioBatali spaghetti sauce, Giada DeLaurentiis balsamic vinegar,Wolfgang Puck soup and Paula Deen knives and mixing bowls.

Personal TouchIt is ironic to note that completely impersonal customerinteractions often yield the most personalized experiences.

Mobile and online technologies enable true one-to-onemarketing, customizing shopping lists, menu plans, coupons andother content to reflect user interests and consumption patterns.

QR codes have migrated from product packages to billboards tonewspapers, magazines and point-of-purchase displays. Toyotadeveloped a branded QR code dubbed ToyoTag as part of apromotion for the 2012 Toyota Corolla featuring a performanceby computer-generated pop star Hatsune Miku. Viewablethrough the Toyota Shopping Tool app,iv the augmented realitycampaign accelerated Corolla lead generation by 30 percent

during the concert week, and Web traffic revved up by 165percent.

Social media, YouTube and digital circulars all joined theelectronic media mix, introducing a fresh element to the retailer/shopper dialogue. Celeb chef Curtis Stone taped how tovideos for YouTube with corresponding recipe and shopping listcoverage in the HyVee circular and on the stores website. Aspart of its outdoor media campaign, Houlihans scrolls customerTweets on digital billboards throughout the day.

In-store shelf talkers take on a new, interactive dimension withQR codes that connect directly to robust websites offeringdiscounts and cross merchandising suggestions such as wine

pairings. Online avatars and in-store service agents assistconsumers with meal management, entertainment, healthand wellness monitoring and fashion selections.

ConclusionVolatility in energy and commodity prices will become the norm,requiring retailers to hedge against commodity fluctuationsand innovate to justify premium prices. A redefined competitiveset will prompt former adversaries to forge marketing alliancesin an attempt to fend off the relentless encroachment of well-financed, disruptive competitors with global reach.

The yawning chasm between income and wealth strata willenable retailers at both the high and low ends of the pricespectrum to prosper by merchandising to niche audiences.Technology, particularly mobile applications, will open the doorto innovative marketing approaches that re-ignite consumerloyalty. Stores will emerge as the social centers of communities,where neighbors can feed their bodies with nourishing food, theirsouls with good conversation and their wallets with great deals.

iDollar Stores Now Outnumber National Drug Store Chains, Colliers International, December 5, 2011 http://www.colliers.com/NewsDetail.aspx?nid=eb66030d-5175-4ae3-85d3-

794ebb4bdd22&nwslst=D:\\Inetpub\\wwwroot\\WEB\\Country\\UnitedStates\\xmldata\\listdata\\LocalNews.xml&title=Dollar%20Stores%20Outnumber%20Natl%20Drug%20

Stores&area=Country/UnitedStatesiiThe Great Tech War of 2012: Apple, Facebook, Google, and Amazon Battle for the Future of the Innovation Economy, Farhad Manjoo, Fast Company, October 29, 2011.

http://www.fastcompany.com/magazine/160/tech-wars-2012-amazon-apple-google-facebookiiiThe Great Tech War of 2012: Apple, Facebook, Google, and Amazon Battle for the Future of the Innovation Economy, Farhad Manjoo, Fast Company, October 29, 2011.

http://www.fastcompany.com/magazine/160/tech-wars-2012-amazon-apple-google-facebookivToyota Taps Into QR Codes and Augmented Reality, eMarketer, December 14, 2011. http://www.emarketer.com/Article.aspx?R=1008733&ecid=a6506033675d47f881651943c21c5ed4


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About Nielsen

Nielsen Holdings N.V. (NYSE: NLSN) is a global informationand measurement company with leading market positions inmarketing and consumer information, television and othermedia measurement, online intelligence, mobile measurement,trade shows and related properties. Nielsen has a presence inapproximately 100 countries, with headquarters in New York,USA and Diemen, the Netherlands. For more information, visitwww.nielsen.com.

retail usa whats in store 2016 white paper mar 2012

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