ecr_demand_committee_igd_trade_formats
TRANSCRIPT
© IGD 2010
Louise Spillard, Director of Research
© IGD 2010
Who is IGD?
• International food & grocery insight and best practice
– Specialising in retail, supply chain & shopper research
• Membership organisation
– Over 700 members from across the supply chain
• Impartial
– Non-lobbying and not-for-profit
• Over 30 analysts with relevant industry experience
• Operate the ECR UK work programme
© IGD 2010
A challenge to secure growth in mature markets
Source: IGD Research
2010 grocery retail growth figures (local currencies) - Top 25 grocery retail markets
© IGD 2010Source: IGD Research
Grocery ‘powerhouses’ switch dramatically by 2014
2006 2010F 2014F
Rank Country €bn Rank Country €bn Rank Country €bn
1 US 612 1 US 638 1 China 761
2 China 328 2 China 529 2 US 745
3 Japan 297 3 Japan 345 3 India 448
4 France 206 4 India 279 4 Japan 360
5 India 190 5 France 205 5 Russia 322
6 UK 188 6 Russia 186 6 Brazil 284
7 Germany 150 7 Brazil 185 7 France 228
8 Italy 127 8 UK 170 8 UK 198
9 Russia 116 9 Germany 160 9 Germany 168
10 Mexico 112 10 Italy 130 10 Indonesia 167
2,326 2,827 3,681
© IGD 2010
The ‘Big 4’ are resuming global expansion N
o. o
f cou
ntrie
s of o
pera
tion
Early Exploration
Source: IGD Research
Rapid Globalisation
Cautious Expansion
Retrenchment
© IGD 2010
No let up in mature markets...
Source: IGD Research
Lower retail prices
Increased customer trafficReduced costs and expenses
Higher sales volumesImproved operating efficiency
Consumer downturnCost
increases
Priceincreases
“Low price productivity loop”
© IGD 2010
You’ve heard of the ‘Credit Crunch’, now…
• The Energy Crunch:– Conventional energy sources are concentrated in fewer hands, are
harder to reach and are getting more expensive to extract – Energy security is becoming a major strategic issue for businesses– Phasing in alternative energy sources will require massive investment
© IGD 2010
The severity of the energy crunch is clear
Source: IHS Global Insights, April 2010. Includes oil and all other associated liquid fuels. Data for 2010 onwards is estimated
Extra oil needed: 42m bpd by 2020,
equivalent to another OPEC
© IGD 2010
Carbon costing
Source: www.thinkstockphotos.com
© IGD 2010
The world’s first zero carbon store – Tesco, Ramsey
Source: IGD Retail Analysis website
© IGD 2010
Carbon labelling
© IGD 2010
Carbon neutral / Carbon negative
Source: www.hippyshopper.com / www.guyotdesigns.com
© IGD 2010
You’ve heard of the ‘Credit Crunch’, now…
• The Energy Crunch:– Conventional energy sources are concentrated in fewer hands, are
harder to reach and are getting more expensive– Energy security is becoming a major strategic issue for businesses– Phasing in alternative energy sources will require massive investment
• The Water Crunch:– Around 70% of the world’s freshwater is used for agriculture – The scale of the problem hasn’t been widely taken on board yet– Embedded water in exports is becoming a new ethical dilemma
© IGD 2010
Regions of water scarcity
Source: FAO 2008, GDI European Food Trends Report 2008
l
© IGD 2010
You’ve heard of the ‘Credit Crunch’, now…
• The Energy Crunch:– Conventional energy sources are concentrated in fewer hands, are
harder to reach and are getting more expensive– Energy security is becoming a major strategic issue for businesses– Phasing in alternative energy sources will require massive investment
• The Water Crunch:– Around 70% of the world’s freshwater is used for agriculture – The scale of the problem hasn’t been widely taken on board yet– Embedded water in exports is becoming a new ethical dilemma
• The Food Crunch:– Global population set to increase from 6bn to 9bn by 2050– Increasing affluence in emerging economies of Asia– Climate change threatens whole swathes of existing farmland
© IGD 2010
Food security – both a national & international issue
Source: DEFRA, January 2010
Source: UNEP, 2009
© IGD 2010
VALUE VALUES
HERITAGE
PROVENANCE
PACK SIZE
ETHICS SUSTAINABILITY
PERFORMANCE
PROMOTIONS
PRICE
A new world of ‘Value and Values’
© IGD 2010
Shoppers are even more focused on price
1. Price
2. Layout
3. Accessible
4. Parking
Source: IGD Shopper Trends 2010
Store choice Product choice Improvements
1. Price
2. Ingredients
3. Fat content
4. Brand
1. Price
2. Local foods
3. Promotions
4. Farm shops/markets
+11%
© IGD 2010
Technology – driving price transparency Asda Price Guarantee – powered by mysupermarket
© IGD 2010
New ‘discounter brands’ have emerged
© IGD 2010
Switch and Save campaigns
Loblaws - Canada
Publix - USA
Sainsbury’s - UK
© IGD 2010
Tesco using online to push private label
Source: Tesco.com
© IGD 2010
Brands have fought back…
© IGD 2010
A growing challenge for branded manufacturers
Source: IGD Shopper Trends 2010, January 2010
Price Brand name Well know brands
2006
2010
2006
2010
2005
2010
2007
© IGD 2010
From this… …To this
“Danone Quality at Small Prices”
6 pots for €1 (vs standard RSP of circa €1 for 4 pots)
115g instead of 125g
No TV advertising & no cardboard sleeve
Developing new value pack sizes
© IGD 2010
Ensuring all price points are covered
© IGD 2010
“We’re going to introduce more PPP’s in developed countries. People may trade down but at least they stay with our brands.”
P. Bulcke, CEO Nestle
Making products more affordable
© IGD 2010
VALUE VALUES
HERITAGE
PROVENANCE
PACK SIZE
ETHICS SUSTAINABILITY
PERFORMANCE
PROMOTIONS
PRICE
A new world of ‘Value and Values’
© IGD 2010
Strength of brands by market
Reliable taste & quality
Wide distribution
Companies are specialists
Heritage
Trust because they are famous
Best quality available
Regularly on special offer
Sold in many countries
Innovation
Say something about you
Shoppers’ views on the strengths of brands
Key strengths of brands
Source: Private Label vs Brands – The Shopper Perspective, May 2009
© IGD 2010
Heritage conveys product reliability
© IGD 2010
Aspiration Performance
The value message is evolving
2008 2009
Value & ValuesPerformance + Heritage
2010
© IGD 2010
How will ethical purchasing change by 2012? - EU
IGD Consumer research July 2010
Net % increase (more – less)
© IGD 2010
Fairtrade becoming mainstream
© IGD 2010
New ethical promotions from key brands
© IGD 2010
Strong ethical message added to entry-level ranges
© IGD 2010
Local initiatives gaining traction
© IGD 2010
Why do shoppers buy locally produced food?
Source: IGD Shopper Trends 2010, base: main shoppers, * because it hasn’t travelled so far
Fresher* Support local producers
Support local retailers
Keeps jobs inthis area
Good for environment*
2006 2008 2010
© IGD 2010
Strength of brands by market
Reliable taste & quality
Wide distribution
Companies are specialists
Heritage
Trust because they are famous
Best quality available
Regularly on special offer
Sold in many countries
Innovation
Say something about you
Shoppers’ views on the strengths of brands
Key strengths of brands
Source: Private Label vs Brands – The Shopper Perspective, May 2009
© IGD 2010
Driving value - Packaging innovation keeps product fresher for longer
Driving product performance - New solutions for established categories
Packaging can be a valuable source of innovation
© IGD 2010
Promotional spend in the UK higher than ever
Source: Kantar Worldpanel. Data for 52 weeks ending (2008 = 5th October, 2009 = 4th October & 2010 = 3rd October)
28.9% 30.7%
33.7%
© IGD 2010
Taking a more strategic approach to promotions
• No silver bullet - be realistic that promotions are here to stay
• Shopper research to understand what promotions work best
• Analyse trade spend & ROI to identify mechanics that DO work
• Introduce innovation e.g. digital and new media
• Integrate campaigns in-store and out-of-store
• Consider joint campaigns with retailers
• Develop top to top relationships to discuss developing stronger
mechanics together
© IGD 2010
Working with specific retailers to innovate
© IGD 2010
Weekend ‘meal deals’ drive traffic
© IGD 2010
‘Buy One Get One Free…… Later’ at Tesco
Source: The Telegraph
© IGD 2010
Driving loyalty
© IGD 2010
Engaging with shoppers – building trust
Source: your.asda .com
© IGD 2010
Engaging with shoppers through feedback
© IGD 2010
Engaging with shoppers through feedback
© IGD 2010
Private label is becoming more ‘inclusive’
Asda has invested £100m in the launch using an independent market research agency to survey customers.
45 testing centres were set up across the UK and results were collected from 200,000 tests.
Each test was blind –participants were unaware the product they were tasting was from Asda.
© IGD 2010
The next day – Sainsbury’s does the same!
"The re-launched Taste the Difference range is our biggest ever
investment in own brand and represents a great opportunity for us. All of our products are either
tested on customers or selected by experts and we have acted upon their suggestions to ensure each
offers the very best in both quality and flavour."
Mike Coupe, Group Commercial Director, Sainsbury’s
© IGD 2010
Technology offers real step change in engagement
Source: IGD, Retailers
“
“We live in a multi-tasking, multi-sensorial, multimedia world so the question for the future of consumer connections isn’t how do we shift from traditional to new media, but how do we maximise multi-touchpoints.”
Irwin Lee, Vice President and GM for UK & Ireland, P&G IGD Convention, Oct 2010
© IGD 2010
Brands are starting to engage directly
© IGD 2010
Integrating digital and online
P&G selling direct on facebook
Source: www.facebook.com/MaxFactorUK
© IGD 2010
Format diversity – multi-format to multi-channel
17%
0%
1%
2%
0%
4%
-3%
-5%
-11%
Source: IGD consumer research 2009
Discounters
Farmers’ markets
Online
Specialist stores
Neighbourhood stores
Supermarkets
Hypermarkets
Home delivery box
Out of town retail parks
High street
Premium stores
24%
19%
16%
14%
7%
6%
5%
2%
-4%
-8%
-11%
n/a
n/a
Showing net % (more – less) By 2012 / next 3 years(Aug 2009)
Next 6 months(Aug 2008)
© IGD 2010
“Drive Through” concepts: France case study
Source: IGD RetailAnalysis, Store Visit Reports, Casino, Auchan
After years of limited development in the online arena, French retailers have adopted the Drive concept to provide additional convenience to shoppers visiting their larger stores.
Key points:
•Auchan first launched the Drive concept as a standalone unit in the early 2000s. Since then, ITM, Metro, Carrefour, Casino, E.Leclerc, System U and most recently Cora have added sites to their stores.
• Shoppers place their order online and pick it up at the back of the store at a specified time. The focus is on heavy item categories for easy and fast shopping.
•In the future, some retailers expect larger stores to transform into gourmet halls with best-in class fresh counters and entertainment to justify a trip to the store.
• In parallel, urban convenience players like Franprixand Monoprix are developing their home delivery services to cater for busy city-dwellers.
© IGD 2010
Convenience concepts evolving rapidly – France
Source: IGD Retail Analysis website
© IGD 2010
Rewe – Temma Cologne, ethical and convenience
Source: LZ
© IGD 2010
Fresh and local – Marqt in Netherlands
© IGD 2010
Edeka’s antidote to the discounters – Germany
Source: LZ
© IGD 2010
Discounters making inroads into convenience
Aldi opens its first forecourt store in Austria
Lidl opens a 500 sqm discount/convenience store under
the ‘express’ banner in the UK
Dia invests into the expansion of Dia Market in Spain, a new fresh focused soft discount format in
city centre locations
© IGD 2010
Discount hypermarket – a local solution by Auchan
Source: LZ
© IGD 2010
Carrefour Planet – Hypermarket reinvention
Source: IGD, Carrefour
© IGD 2010
A new approach to ‘Big Box’ retailing
Source: IGD Retail Analysis website
© IGD 2010
Closing thoughts...
• A new world of ‘Value and Values’ has emerged
• Operational efficiency remains a priority
• Shopper engagement is becoming much more personalised
• The role of technology is set to increase
• Store format innovation remains critical for competitive edge
• There ARE still ways to add value...
© IGD 2010
For more information…
• Please contact [email protected]
• IGD Free Breakfast Briefings next month– Melbourne 24 November, Sydney 26 November– Book via www.igd.com
• Visit the IGD website www.igd.com