June 17, The Future of Food Retailing

Transcription

1 June 17, 2015 The Future of Food Retailing Moderator Brian Todd Hosts Jim Hertel & Craig Rosenblum

2 Agenda Trends Macro Industry Digital Omni-Channel Promotion Shopping Fulfillment ecommerce and Digital Strategies Storehouses Planning Shopper Insights Pricing in the Digital Age Transparent Personal Redefining Convenience and Value Shopper Insights Connectivity Disruptive Product Innovations Focus on the Future Collaboration Innovation Cultural Shifts Additional Resources 2

3 Economic Recovery Continues Employment is up Housing is up Food Inflation rates have returned to historical levels (5.8% in % in 2015) Oil is trending up ($45.90/Barrel in January 2015, increased to $59.13 in June 2015) US Unemployment Rate 4.6% 9.6% 5.4% Source: USDA Source: US Department of Labor April

4 A Quick Look Back: 2014 Traditional Grocery increased sales 4.7% and grew market share by.3% Growth was driven by Limited Assortment and Fresh Format stores Traditional Grocery 46.3% Non- Traditional Grocery 38.6% C-Store 15.1% Share for Non-Traditional Grocery decreased by nearly half a percentage point despite increasing channel sales by 2.7%. Sales for Dollar formats were up 5.7% while Drug Store sales decreased by.3%. Sales for Wholesale Club and Supercenter were up 3.6%; however the entire Mass channel was down 1.2% in sales and down 6.3% in store count Notes: Results include sales from food and consumables only in these channels Convenience had modest growth Traditional grocery formats have two-thirds or more of their sales represented by food and consumable products C-Store percentages do not include sales from gasoline 4 4

5 Format Ranking by Percentage of Revenue Growth 16 Traditional Grocery Non-Traditional Grocery Convenience Stores ecommerce Source: Willard Bishop, The Future of Food Retailing 5

6 Channel Trends Dollar Share by Channel (Rounded) 8% 2% 16% 15% 15% 34% 37% 39% 15% 90% 50% 48% 46% Traditional Grocery Non-Traditional Grocery Convenience Stores Source: Willard Bishop, The Future of Food Retailing 6

7 Dollar Share 2014 versus % Traditional Grocery -0.4% +0.4% Non-Traditional Grocery -0.2% +0.5% Convenience -0.2% -.02% +1.3% +1.6% -0.2% -1.0% +0.4% NC +0.1% NC NC ecommerce +183% (combined channels) +183% Source: Willard Bishop, The Future of Food Retailing 7

8 Mergers & Acquisitions Will Continue and Become More Diverse 8

9 The Future: 2020 Population (Billions) Ads 8, , Global Social Media Ad Spending (Billions) Internet Connected Devices B 33 B Number of Devices Devices/Person

10 Competition for your Shopper is just Getting Started Technology will drive service dash B2C will continue to grow Time and Convenience Meal preparation Personal Shopping and Home Delivery 10

11 Omni-Channel Omni-Channel

12 Omni-Confusion Multi-Channel is not Omni-Channel Digital is not Omni-Channel Omni-Channel is not a Channel Omni-Channel is a Misnomer The Element of CONFUSION Shopper Connectivity via Integrated Promotion, Shopping and Fulfillment 12

13 Choices in Fulfillment & Managing the Last Mile Distribution Center Dark Store Store Pick Parcel In-Store Curbside Drive Thru Home Delivery 13

14 Expanded Promotional Vehicles Offers & Promos Engagement & Social Selling Branding/Image & Recipes SEO (Future Uses) Experiential 14

15 Promotion at the Point of Purchase Geo-Fencing & Beacons Image from MJDInteractive.com 15

16 This Just In Walmart testing unlimited shipping for less than Amazon 16

17 This Just In Instacart adds 16 th city: Miami 17

18 ecommerce

19 Understanding ecommerce General Learning Shopper Behavior Category Performance Grocery generates 32% of ecommerce sales Online orders large and consistent (avg. 44 units/basket and +$140 They are 4X-5X larger than Brick & Mortar orders 90% of orders are stock-up orders vs. less than 15% for Brick & Mortar Source: Willard Bishop 2015 ecommerce Superstudy Order size is consistent (Platinum, Gold, Silver, etc.) Order size is similar between trialists (38%) and loyalists (62%) Express Lane Soccer Moms and Home Delivery - Elderly Assortment same on-line and instore (17K 40K) The top 15 Online categories are the same as the top 15 Brick & Mortar categories Many Food, Beverage and GM categories are indexing Online vs. Brick & Mortar Frozen and Refrigerated categories over-index Fresh and HBC are under-indexing 19

20 ecommerce & Digital Performance 10% of Sales 20

21 This Just In Walmart, the 3 rd Largest ecommerce Retailer* Commits $1B to its Online Effort * Behind Amazon and Apple Source: JPMorgan Chase 21

22 Walmart Continues Testing Home Delivery, Pick Up, Dark Stores with Alternate Pick Up Locations Home Delivery Store Pick Up Store Pick Up Home Delivery & Store Pick Up Dark Store & Pick Up 22

23 Jet: The eclub Jet.com set to deliver unprecedented efficiencies Buyers shop products, not retailers At checkout, Jet determines which retailer can provide the best value based on location, product mix, delivery costs, etc. The retailer offering the greatest value wins and fulfills the order Jet makes its money by selling memberships for $49.99/year The company, which is still in its prelaunch stage, has already secured funding in excess of $200 million 23

24 ecommerce is Profitable.On a Direct Basis Fully loaded, ecommerce programs lose money On a direct basis ( touch labor ), they are profitable D.C. programs are more profitable than store pick programs The last mile is expensive ecommerce Fulfillment Models (most profitable to least profitable) Most to Least Profitable ecommerce Fulfillment Models PROFIT 1. DC Pick, Home Delivery 2. DC Pick, Parcel 3. Dark Store, Home Delivery 4. Store Pick, Express-lane Drive-up 5. Store Pick, In-store Pickup 6. Store Pick, Home Delivery 7. Store Pick, Parcel 24

25 Redefining Convenience & Value

26 Only Two Ways to Compete Price Differentiate 26

27 Connectivity Drives Price Transparency Ubiquitous pricing means retailers will have to better align their price offerings in order to engage the digitally-connected shopper Faster Competitive Insight Easier Price-Matching Empowered Shopper Forced Differentiation 27

28 Differentiation Avoid the Unsustainable Middle Ground V A L U E E X P E R I E N C E 28

29 Customer 1 st Initiative People, Products, Shopping Experience, and Price 29

30 Shopper Insights Provide Merchandising and Marketing Direction How do I drive trips and Increase basket size? Who are my most valuable customers? What products do they buy? Will they substitute? How promotion responsive are they? How price sensitive are they? What s my share of their wallet? What are their churn rates? 30

31 Leading and Proven Process Targeting, mailing and improving ROI 42 Million HHs Insight & Understanding Purchase-Based Marketing Analysis Targeted Customer Communication 31

32 Data Driven Decision Making Crawl Walk Run Data Shipment/POS T-LOG/Basket Unique Shopper ID Segmentation Deciles Clusters RFMB Pricing Cluster Price Sensitivity Product Appeal Shopper Behavior Personalized Promotion Ad Group Lift and Elasticity 1-to-1 Incrementality Assortment Sales and Profit Switching, Cannibalization and Incrementality Space National CDT s Shopper Based Decision Trees Category Variance Behavior Based Clusters 32

33 Focused on the Future

34 Apps Continue to Improve the User Experience 34

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36 Disruptive Innovations Magic Eraser Toilet Scrubber PacXpert: Packaging Innovation by Dow - Anything pourable motor oil, pet food, granola, etc. Swiffer Steam Mop 36

37 Modular Approach to Execution Shopper Analytics Understand the value of each segment and develop strategies that align offerings with behaviors Adopt shopper- driven merchandising strategies and tactics Value Equation Define your competitive pillars; then pursue and promote them relentlessly Evaluate Benchmark Refine Omni Channel Begin to integrate your path-to-market to capture sales everywhere Digital/Mobile Fulfillment & Delivery Personalization

38 Additional Resources WillardBishop.com/Insights 38