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  • © IGD 2014

    Follow us on Twitter @RetailAnalysis

    February 2014

    http://twitter.com/retailanalysis

  • © IGD 2014

    IGD – delivering insights and best practice

    • IGD is a research and training charity that helps the food and consumer goods industry deliver the needs of the public

    • 800 members globally from the consumer goods industry

    • IGD is inclusive and works across the whole supply chain

    Future Proofing & Innovation

    Retail & Channel

    Strategies

    Commercial & Category Excellence

    Efficient & Sustainable

    Supply Chains

    Source: IGD Research

  • © IGD 2014

    Agenda

    Trends influencing grocery retailing in Europe

    Strategies of the top five grocers in Europe

    Final thoughts…

    Source: IGD Research

  • © IGD 2014

    Trends influencing grocery retailing in Europe

    Strategies of the top five grocers in Europe

    Final thoughts…

    Source: IGD Research

  • © IGD 2014

    We continue to live in exciting times…

    Source: IGD Research

    3 This has big implications for suppliers

    It’s a generational shift… and strategies are having to change 2

    1 Several forces are hitting the largest retailers at once

  • © IGD 2014

    Macro trend one: shoppers

    Source: IGD Research

    1 Shoppers everywhere are aspirational

    3 Access to technology is empowering shoppers

    4 Rising transport costs and congestion discourages long journeys

    2 Economic uncertainty affects almost everyone

    5 Ethical concerns are on the rise

    Five global truths about shoppers…

  • © IGD 2014

    Macro trend two: disruptive technologies

    Source: IGD Research

    Smartphones and tablets

    The high tech home

    The internet

  • © IGD 2014

    Macro trend three: fragmenting shopper journeys

    Source: IGD Research

    MULTICHANNEL ONLINE STORE BASED

  • © IGD 2014

    Macro trend four: uncertain supplies

    Source: IGD Research

    Climate

    Fish

    Energy

    Water

  • © IGD 2014

    Macro trend five: reputational risks

    Source: IGD Research, Daily Dish, Financial Times, Marketing Week

  • © IGD 2014

    Pressure on Europe’s largest grocers is clear

    Source: IGD Research

    0.6%

    -0.6% -0.7%

    -1.1%

    -0.7%

    -1.4%

    -1.1%

    -2.0%

    -1.5%

    -1.0%

    -0.5%

    0.0%

    0.5%

    1.0%

    Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013

    A ve

    ra ge

    li ke

    -f o

    r- lik

    e g

    ro w

    th r

    at e

    ( %

    )

    Average like-for-like growth rate

  • © IGD 2014

    Trends influencing grocery retailing in Europe

    Strategies of the top five grocers in Europe

    Final thoughts…

    Source: IGD Research

  • © IGD 2014

    Five winning strategies

    Investing in operations at

    home

    Delegating responsibility to the ‘right’

    person

    Continuing focus on price

    Investing in winning formats

    Growing multichannel

    expertise

    Source: IGD Research

  • © IGD 2014

    Re-localisation – is globalisation over?

    Source: IGD Research. Flags represent markets that retailers have exited.

  • © IGD 2014

    -8.0%

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013

    LFL sales growth (excl. fuel)

    Hypermarkets Supermarkets

    Re-focusing on growth at home

    Source: IGD Research, Carrefour

    “Never underestimate the power of domestic rivals…”

    George Plassat World Retail Congress 2013 Paris

  • © IGD 2014

    Investing in home market operations

    Source: IGD Research, Carrefour, Rewe, Tesco

    2013 Capital expenditure

    €2.3 billion

    2014 Capital expenditure

    €1.6 billion

    2012/2013 Capital expenditure

    €1.2 billion

    Remodel 150 hypermarkets in the

    next three years

    Monitor performance and test new concepts

    Six part plan to ‘Build a Better

    Tesco’ in UK

    Evolution of hypermarkets to

    continue

    Focus on convenience and improving Penny

    Establishing multichannel

    leadership

  • © IGD 2014

    Simplifying structures, delegating responsibility

    Product differences

    Range differences

    Promotional differences

    Lack of autonomy

    Slow to react

    Bureaucracy costs

    Source: IGD Research

  • © IGD 2014

    Carrefour hands responsibility down

    Source: IGD Research

    “Excessive centralisation… killed store based

    initiatives” George Plassat – interview

    with LSA

    Investment in people

    Management decentralisation

    and empowerment

    Franchising in convenience

  • © IGD 2014

    Rewe targets local shoppers

    Source: IGD Research

  • © IGD 2014

    Continuing focus on price

    Source: IGD Research, Eurostat

  • © IGD 2014

    Carrefour: delivering a balanced approach to price

    Source: IGD Research

  • © IGD 2014

    In the science of pricing: flexibility will be key

    Source: IGD Research

  • © IGD 2014

    Price matching, more than a UK phenomenon

    Source: IGD Research

    Amazon Price Checker E Leclerc

  • © IGD 2014

    But… trend is evolving from value to values

    Source: IGD Research

  • © IGD 2014

    But… trend is evolving from value to values

    Source: IGD Research

  • © IGD 2014

    Discounters are driving this change too

    Source: IGD Research

    Lidl, Czech Republic Lidl, Portugal

    More than half of the groceries we sell are Irish.

  • © IGD 2014

    Investing in winning formats

    Source: IGD Research

    CORE FORMATS GROWTH FORMATS

  • © IGD 2014

    Tesco: maximising existing stores

    Source: IGD Research

    Dedicated food-to-go area

    Enhanced and softer signage Baby category

    Premium fixtures and ranges in H&B Food first strategy

    Multichannel ingrained

  • © IGD 2014

    Estate tailoring Focus on fresh Food-to-go

    Local Value

    Focus on convenience is growing

    Source: IGD Research

  • © IGD 2014

    Rewe highlighting focus on fresh and food-to-go

    Source: IGD Research

    Fixtures create softer-looking category

    Fresh, a strong area of focus Salad bar food-to-go option

    Coffee station attracts shoppers Innovative packaging solutions Extensive range of food-to-go

  • © IGD 2014 Source: IGD Research

    2013 4.0%

    2018 7.0%

    Growth 2013-18

    124%

    Cash Gain 2013-18 +£8 bn

    2013 £6.5 billion

    2013 16%

    Growing multichannel expertise: A focus on the UK

  • © IGD 2014

    Tesco’s evolving multichannel offer

    Source: IGD Research

    Pick in-store Click & Collect Delivery only

    Tesco

    Dark stores Click & Collect in Express stores Click & Collect anywhere

  • © IGD 2014 Source: IGD Research

    1.5m online GM orders, up

    25%

    Over 3m online grocery

    orders, up

    11%

    Online clothing

    sales

    +70%

    Tesco’s multichannel 2013 Christmas

    Source: IGD Research, Tesco (sales for six weeks to 4 January 2014 unless stated)

    70% of online GM customers used Click & Collect

  • © IGD 2014

    Netherlands: channel and scale can grow quickly

    Source: IGD Research

    2012 2013 2014

    Oct Jan March Nov Feb May September

  • © IGD 2014

    Trends influencing grocery retailing in Europe

    Strategies of the top five grocers in Europe

    Final thoughts…

    Source: IGD Research

  • © IGD 2014

    Final thoughts on the future…

    Source: IGD Research

    The winners of the future are no longer so obvious…

    And how they are going to win is changing

    Channel specific strategies are increasingly in focus

    Shoppers’ promotional fatigue creates opportunities

    Value and values allows retailers to differentiate

    Large retailers are looking for advice to target their offer

    1

    2

    3

    4

    5

    6

  • © IGD 2014

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